Overcoming credit problems should be a priority because your credit score can make a significant difference in your financial future. It drives the interest rate when you buy a home, car and other assets. Below are five ways you can overcome problems with your credit.
1. Check Your Credit Reports
Everyone has a credit report and there are three different agencies that provide them: Equifax, Experian and TransUnion. There’s also a company called Annual Credit Report.com that will provide you with a free copy of you credit report that’s comprised of information from all three bureaus. You’ll need to check your credit report for errors and have them removed, which will raise your FICO score.
2. Identify Problem Areas
If you have a low credit score or other issues with your credit, it’s important to understand the root of the problem. You’ll need to identify exactly what’s causing the problem. Do you need help creating a budget? Do you need to earn more money? Do you shop too much? Whatever the issue, it must be defined before it can be resolved. If your issue is paying bills late, you can resolve this by setting up automatic bill payments for everything.
3. Develop Good Habits
Once you have identified and addressed any bad habits, it will be time to develop good habits. For instance, you can cultivate the habit of saving money every week and placing those funds in an account that isn’t easily accessible. You can also develop the habit of cooking at home instead of eating out at restaurants. Sometimes it’s the small things that make a big difference. For instance, why not make coffee at home and take it to work instead of going to the coffee shop daily? That’s a habit that will pay dividends.
4. Create a Strategy
Resolving any type of problem often requires intention. To overcome credit issues, you’ll need to be clear about what must happen. You can use a simple checklist and calendar to document what must be paid off, when bills are due and anything else that can help you stay on track.
5. Resolve Collection Accounts
One of the biggest problems that can destroy your credit is having collection accounts. They should be resolved as soon as possible. It’s often possible to make arrangements with the collection agency to pay only a portion of what’s owed.
Overcoming credit problems isn’t as difficult as you might think. The tips provided can help you get a jumpstart. It’s simply a matter of planning and staying disciplined. The rewards for doing so can be tremendous.