With many people living paycheck to paycheck, it’s understandable that there are times when you can fall behind on your bills or make bad credit decisions. Once things start to snowball out of control, it can be hard to get back on track. If your FICO score has begun to sink or it’s already hit an all-time low, there are a few simple steps you can follow to help rebuild your credit and help get yourself back on track.
Monitor Your Credit Report Regularly
Everyone is entitled to one free copy of their credit report each year from the three main credit reporting agencies, Experian, Equifax, and TransUnion. While you can only get updates like this once a year, there are also a variety of apps that can be added to a smartphone or tablet that allows you to monitor credit score on a daily basis. You aren’t charged when you use the apps, and your credit score won’t change when you log in.
Correct Any Errors You Find
When you obtain your full credit report each year, go over it carefully and look for any errors or discrepancies. If you file a dispute on possible errors, the credit bureaus will investigate the item and remove it if it’s found to be erroneous. This is the best way to get rid of negative accounts that have already been dealt with.
Know When Your Payments Are Due
Keep a calendar handy that shows when all of your payments are due. Try to pay each one a week or more before it’s due. This will prevent late payments and may even work to get you ahead. Pencil in dates throughout the month for you to put an extra $5 or $10 in your savings account as a backup.
Pay More Than the Minimum Payment
If you have credit cards or loans, always pay more than the minimum payment. Paying over the minimum amount allows extra to be put on the principle of the loan. This lowers the amount of interest you will pay over the course of the loan. When it comes to credit cards, it will help you to pay them off much faster than if you only paid the minimum.
Credit restoration isn’t rocket science, but it can be a challenge. Once you get in the habit of monitoring your credit score, you’ll learn where you need to be more diligent. It will take some time, but your credit score will slowly start to rebound giving you the financial advantage you’re looking for.