5 Tips to Easily Improve Your Credit
CREDIT TIP #1
GET A FREE COPY OF YOUR CREDIT REPORT
Get a free copy of your credit report from annualcreditreport.com. We know you’ve heard it, but in all reality you can’t provide a good argument to a lender, if they know more about your credit than you. This reports costs you $0.00 and gives you a heads-up on what you need to work on, to improve your credit score.
Once you have your report in hand, go through each account. In the order of how much is owed, number each account starting with #1. Start at the bottom of the list and decide whether you need to dispute the charges or pay them.This is the order you are going to work these accounts: from the lowest amount owed up to the highest. One by one you will remove these accounts from your credit report.
Every account that you believe you have paid off, file a dispute. For every account that you know you owe money, contact the collection agency and make arrangements (depending on your budget discussed in Credit Tip #2 below). Remember you are closing these accounts one by one so don’t try to make arrangements on all of them at the same time – one at a time.
CREDIT TIP #2
MAKE A BUDGET
Gather your last 3 months records worth of pay (paycheck stubs, bank statements, etc.). For each month add up your net income to find out how much money you actually bring in every month. Call this number A. If you bring in different amounts each month, use the lowest amount for 1 month.
Next take you last 3 months records of expenses and add up your basic expenses necessary for you to function every month (mortgage or rent, utilities, child support, car payment, insurance, groceries, gas for your vehicle, laundrymat funds, etc.). Leave out extracurricular activities: no movies, video games, car washes, cigarettes, clothes (yes they are important but not for this calculation), haircuts, etc. Call this number B. If your expenses change monthly, use the highest amount for 1 month.
Take A and subtract B (A-B = your money). If you came out with a negative number, you have to reduce B or legally increase A. There are no 2 ways about it. Do one or the other. Find a way to bring more money in, or decrease some of your expenses in B. You will not figure this out overnight, but at least you will know where to start and what should be in the back of your mind.
Can you fit more clothes into one load of laundry? Can you carpool and save on gas? Can you walk to work or ride a bus? Can you use a fan and open the windows instead of the air conditioning on nice enough days? Can you open the blinds instead of turning on the lights? Can you layer up on clothes and blankets instead of using high heat in the winter? Can you Google ‘dinner ideas on a budget’, and cook for the week instead of eating out 2 or more times a week?
If you get paid bi-weekly, then take your number (take your A for income for 1 month as well as take your B for expenses for 1 month) for the month and divide it by 2. This will give you your income for every 2 weeks and your expenses for every 2 weeks.
A budget is crucial to improving your credit score. Once you get to a point where ‘your money’ is a positive number, then you can divide it among other things that need to be paid – like the creditors on your credit report.
CREDIT TIP #3
REWARD YOURSELF
We all make sacrifices to enjoy a greater reward than what our sacrifice ‘takes away’.
Once you have stuck to your budget for 1 complete month, take yourself out to eat, or buy a nice shirt, or go see that movie that just came out, or go to the salon. Now don’t undo your whole month of work; otherwise you didn’t complete anything. Whatever you budget will allow is what you should use to treat yourself. As you continue sticking to your budget, your treats will become nicer and more frequent.
But complete the 30 days FIRST. You are here because you want a change. If you stick to the plan, there will be change. You can’t lose as long as you keep putting one foot in front of the other. Don’t look at 2 weeks from now, look at today.
CREDIT TIP #4
USE YOUR RESOURCES
If you have any policies that you bought to pay for unfortunate accidents or situations – use them. Do you have a GAP policy? Do you have a car payment and that car got totaled? Do you have medical insurance? Do you have a warranty on your sofa?
Any insurance or warranty you have purchased, you need to use. Could your insurance go up? Yes. But would you rather your insurance go up $50 or have a repossession on your credit? Which could hurt you more when you try to get your next loan? I’ll tell you! The repossession. SAVE YOUR CREDIT!. Negative marks last much longer than increases in premiums.
If you are in an accident and you have insurance – DO NOT STOP MAKING YOUR CAR PAYMENTS! If you have roof damage on your home – DO NOT STOP MAKING YOUR MORTGAGE PAYMENTS.
To improve your credit, you have to take responsibility for the promises you made to pay money back. Use whatever resources you have to ensure you keep your promises.
CREDIT TIP #5
TAKE CONTROL OF THE UNKNOWN
Some of the things we have mentioned sound like they could never work. The only way they will not work, is if you don’t do them.
Changing your lifestyle can sound scary, it can sound boring, it can sound depressing; and it might be one or all of those things. But what do you want? Do you want a change or do you want things to stay the same?
With all of the steps we have given, the only ones you can’t control are the creditors responses. But you would be surprised how many companies will actually take arrangements. THEY WANT TO GET PAID. If you can at least call them and make arrangements to pay them the money you owe, they will more than likely be willing to work with you – even if they say they won’t. Like we mentioned: you can’t control the creditors responses. But when you call XYZ company and attempt to make arrangements and they say no, you can note that on your credit report; when you are talking to a bank about your credit report, you can tell the loan officer “I have made every attempt to pay off that balance, and XYZ company refuses to take payments.”