Ways to Restore Your Credit Reputation

A credit score is the numerical representation of your credit worthiness. It is used by lenders to determine how likely you are to repay a debt. Your credit score can be damaged by late payments, missed payments, and other credit mistakes. A low credit score can prevent you from borrowing money, renting an apartment, and even getting a job. So it is important to know about credit repair reviews which look for negative items that are affecting your credit reputation. Also to know about several ways to restore your credit reputation and boost your credit score. Here are four of the most effective methods.

Pay Your Bills on Time

One of the most important factors in your credit score is your payment history. Make sure you pay all of your bills on time, every time. This includes credit card bills, utility bills, and any other recurring payments. Set up automatic payments if necessary to ensure that you never miss a payment.

 

A way to stay on time with payments can be to pay off a credit card balance completely at the end of a month rather than end up paying it off in installments. This would be a good demonstration of someone who can borrow money and then pay it back as quickly as it was due.

 

It is also tempting to think that other bills you are late paying will not make a difference when they will. Your credit history is connected to how well you pay back what is borrowed from financial institutions but this is not the only thing that is taken into account.

Keep Your Credit Card Balances Low

Your credit utilization ratio is the amount of credit you are using compared to your credit limit. For example, if you have a credit card with a $1,000 limit and you owe $500, your credit utilization ratio is 50%. It’s important to keep your credit utilization ratio low because it shows lenders that you’re not maxing out your credit cards. Aim for a credit utilization ratio of 30% or less.

Apply for a Secured Credit Card

A secured credit card is a credit card that is backed by a deposit you make with the issuer. For example, if you open a secured credit card with a $500 deposit, you will have a credit limit of $500. A secured credit card can help you rebuild your credit because it reports to the credit bureaus just like a regular credit card. Just make sure you use it responsibly and pay your bill in full every month.

Become an Authorized User

If you have a friend or family member with good credit, you can ask them to add you as an authorized user on their credit card. As an authorized user, you will get your credit card with a credit limit that is equal to the primary cardholder’s credit limit. You will also inherit their positive payment history, which can help boost your credit score. Just make sure the primary cardholder pays their bill on time and in full every month.

 

The point is to be careful about who you owe money to because it might backfire on you should you delay in paying them back. This can then affect our future ability to secure credit when we need it. This can be for major purchases such as vehicles, a dream holiday, a wedding, or a house. We may be severely restricting our financial options in the future if we could have paid that money back on time but didn’t.

 

Make a note of the four effective ways above to restore your credit reputation and set about boosting your credit score. By following these tips, you can improve your ability and confidence to borrow money in the future.

FUNDRISE | Real Estate Investing

About Kamilah

My name is Kamilah and I am a native New Yorker of Caribbean descent who is passionate about helping you learn how to invest and build your net worth by sharing easy-to-follow YouTube tutorials that will help you take control of your money and set you up for financial success. But this wasn’t always my story.

Leave a Reply

Your email address will not be published.

Get Your Free Guide

This free guide will teach you the 5 payday mistakes that are keeping you from growing your savings and investments accounts, and how to fix them!