03. How To Repair Your Credit Score in 5 Steps
Living with bad credit is tough! It makes many things impossible, difficult or more expensive. Nowadays, insurance companies, utility companies , and even certain employers will check your credit score before making an employment decision. Your credit score could be the difference between having to pay a security deposit or getting the job of your dreams.
If you have made some bad credit decisions in the past, don’t worry, you can fix it! Let’s talk about 5 things that you can do today to start repairing your credit.
1.) Pay your bills on time
  • Pay bills and any existing lines of credit on time if you possibly can
  • Paying only the minimum is fine, if that’s all you can manage
  • If you see it’s not possible to pay at least minimums, contact your creditor to see if other arrangements can be made, at least for now.
  • Why? Your payment history is the single biggest factor affecting your credit score
  • When you are rebuilding credit, you cannot afford to have a payment reported as late
  • Late payments stay on your credit reports for up to seven years
  • If some bills have gone to collections, prioritize the ones where your account is open
  • Collectors may make the most noise, but they aren’t your top priority
2.) Try to keep most of your credit limit available
  • The top thing you can do for your credit is pay on time, however the second best thing you can do for your credit is keep your credit limit available
  • Keep your balance at 30% of your credit limit or lower.
  • For instance if you have a credit card limit of $1,000 you want to keep your balance under $300
  • What can you do now? If you currently have credit cards, calculate 30% of your limit
  • Your score will increase easily if you just bring down your balance
3.) Get a secured credit card
  • If your credit accounts have been closed, you may need to start over with a new card
  • You can get a secured credit card. A secured credit card uses money you give them as a security deposit. So for example you will give the company $500, and they will hold the $500 and give you a card with a $500 limit.
  • Ensure that you choose a secured credit card that reports to all three credit bureaus
  • Once you receive your secured card, don’t use more than 10% of your credit limit. So if you receive a card with a $500 limit, you only want to spend $49 on that card each month
  • Then pay it off in full one week before the due date of the card
  • Repeat this process every month and your score will increase as they continue to report to all three bureaus
  • Usually after about 6 months to 1 year of this process the secured credit card company will give you the option to transition your secured credit card to another regular credit card
4.)Get a credit builder or a secured loan 
  • Get a secured loan that’s purpose is to help rebuild your credit
  • You are most likely going to find the best secured loan at a credit union
  • You will have to open up an account because you will need to be a customer and you will also have to show proof of income and the ability to repay
  • The lender holds onto the money as you repay and releases it to you once you have fully repaid the loan
  • Borrow the amount, put the amount that they give you in an account at the credit union
  • Set up an automatic payment from that account to the loan and once it’s paid they will report to the credit bureau
  • This will ensure that your payments are on time and you need it to be paid on time because a late payment will damage your credit
5.) Get a Retail credit Card
  • Victoria Secret, Express…any store that you don’t shop often
  • Once you receive the retail card, don’t use more than 10% of your credit limit
  • So if you receive a card with a $500 limit you only want to spend $49 on that card and pay down the balance in full one week before the due date of the card
  • Repeat this process
Other Things You Can Do: Become an Authorized User:
  • Ask someone to add you as an authorized user on a credit card
  • Your credit benefits from being on the account
  • You don’t have to make any charges or have to access the account
  • The impact on your score may be modest because you aren’t legally responsible for debts on the acct.
  • And be careful to make sure that the account holder continues to pay their bills on time
Other Things You Can Do: Add a Co-signer
  • Get someone to co-sign a loan or a credit card
  • This is a huge favor because you are asking them to put their credit on the line and take full responsibility for repayment if you don’ t pay as agreed.
  • Use this option with caution
Other Things You Can Do: Limit inquiries to every 6 months
  • Hold off on pulling your credit report
  • Too many inquires can cause your credit score to decrease
  • Use other options to look up your score. Like Capital One. Credit Karma