Do you have poor credit? According to Experian, 21.2% of Americans are in the same boat.

You don’t have to be stranded in financial limbo. If you’re stressed about repairing your credit, we have good news for you. Improving your credit standing is not nearly as complicated or difficult as you may think it is.

Learn how to repair your credit with these 12 simple tips.

 

Don’t Apply for Credit Cards on a Whim

According to a 2016 survey, most Americans have 3.4 credit cards. While there may not be a magic number of credit cards to own, financial advisors advice against applying freely for numerous credit cards at once. 

How to Repair Your Credit In 12 Simple Steps

Each time you apply, you could lose points off your score. And this is not something you need if you’re already trying to repair bad credit. The reason this impacts your score is that credit-card applications require a hard inquiry.

A hard inquiry involves a request for a full credit report. You can lose points each time this request is made. And if you submit multiple credit card applications, you can lose even more from your credit score. The number of recent inquiries potential lenders are making about your financial history can add up in a bad way.

 

Keep Low Balances

It may seem like a no-brainer, but maintaining low credit card balances can be a major way to repair your credit.

Start with the cards that have the highest balances and pay as much as you can above the minimum amount.

While the minimum payment is sufficient, going the extra mile can help you save more and pay less in the long run. That’s because you’ll be cutting down on the financing charges. Paying more will also help you whittle away the balance much faster.

If you have budget limits, chipping away at your balances with monthly payments may be your only option. But if you keep at it or eventually manage higher payments, it will be worth it.

 

Make Good on Past-Due Bills

If you’re suffering from bad credit, chances are you’ve missed a bill or two. Late or missed payments carry a lot of weight when it comes to your credit report and credit score. Late payments and other negative comments linger on your credit report for seven years.

While you can’t do much about this type of blemish, take care to settle up those late payments and avoid more strikes on your report.

 

Pay Your Bills on Time

Missing payments reflect poorly on your credit report. To avoid negative marks due to poor payment history, set yourself up for success with automatic bill payments.

You could set calendar reminders to ensure you never miss a date. You could also take this one step further by scheduling automatic payments through your bank account.

Keeping this as error-proof as possible will prevent you from missing your payment deadlines and strengthen your credit history.

 

Correct Errors on Your Credit Report

Everybody is entitled to one free credit report each year from the three main reporting agencies: TransUnion, Experian, and Equifax. This report collects important personal and financial information including:

Your social security number and other details related to your identity

Details about your credit, including the history of student debt, credit cards, and other loans

Anything in the public record such as filing for bankruptcy or court judgements

Any recent credit inquiries made by companies or other individuals

Take advantage of your ability to request this free report and make sure all the information is correct. If there are errors, you have the right and ability to make sure they’re revised.

It’s also an important way to make sure you’re not a victim of identity theft. Check to see that there are no records of credit card accounts or other loans in your name that you did not apply for.

 

Check Your Credit Score

Over 90% of lenders use your FICO score when they’re considering whether or not to lend to you. There are other credit scoring models like Vantage Score, which is what the three major credit bureaus, TransUnion, Equifax, and Experian, use.

When you apply for a credit card or other loan, the company will often share your score with you. But when you’re working to rebuild credit, you may want to keep an eye on your score more regularly.

There are a number of free online services you can use to do just that without hurting your credit score at all. These platforms can also help you identify ways to improve your score.

 

Become an Authorized User

When you’re in the midst of credit repair, one tactic that can help move things along is to become an authorized user on an account that’s in good standing. If a loved one or spouse has strong credit and consistent payment history, you can benefit.

As an authorized user, you’re not obligated to make any payments. The primary account holder simply adds you to his or her account and grants you permission to use the account.

Once this happens your authorized user status will eventually show up on your credit report. The way that the primary account holder handles the account will impact your report. That’s why it’s important to make this decision carefully.

Regular payments and good account standing will help your personal credit history and score. But if the primary account holder defaults, this will also negatively impact you.

 

Use a Secured Credit Card

Another way to set yourself on the right course toward repairing your credit is to use a secured credit card. Secured credit cards require a security deposit that is refundable to you once you’re approved for the card. This kind of credit card can be good for those looking to establish and improve credit.

Unlike unsecured credit cards, there’s a fail-safe in place with the security deposit. This amount of money is usually less than or the full amount of your credit line. Rather than worrying about whether you can pay back what you owe, you know exactly what you can afford.

In some cases, secured credit cards come with a points and rewards system and without annual fees. You may also be able to transition from a secured card to an unsecured credit card. This can be a great way to repair credit and increase your credit line.

 

Build up Your Budgeting Skills

If you’re juggling a number of credit card balances, especially one or two with high-interest rates, it’s important to get a handle on your budget. Sit down and calculate monthly payments and make sure to set aside that money.

Don’t just stop there. Figure out what you need to allot for groceries, bills, housing, and entertainment, and stick with it.

If you’re not sure how to do this, you could ask for help from a professional, friend, or turn to online tools. Even a spreadsheet could be a helpful starting point.

It may seem like a basic step, but it’s an essential building block toward credit repair and financial freedom.

 

Don’t Close Credit Card Accounts

When you do pay off a credit card in full, it’s great to celebrate. But don’t mark the occasion by closing the account. Cancelling accounts that are in good standing actually works against your credit score. It can be especially bad if you close a card that has a high credit limit.

Rather than risk undoing all the great work you’ve done, keep the card open and designate it for a particular monthly bill payment. Or use it on occasion for a purchase you know you can pay off in full.

 

Ask for a Credit Limit Increase

When you’re well on your way toward a better score and you have your balances in good shape, you may want to consider a credit limit increase.

Asking for more credit on a certain account with a low or zero balance can help you in a big way—if done right. It will help you improve what’s known as your credit utilization ratio.

Basically, you want to have a low balance relative to the total credit limit. Extending your credit limit on an account in good standing can help you improve this figure.

Keeping your monthly balances low and avoiding maxing out your credit cards are helpful ways to display a smart (and low) utilization ratio. This shows lenders that you know how to manage your debt in a responsible way.

 

Get Credit Counseling or Debt Repair Assistance

In some situations, you may find yourself at an impasse when it comes to repairing your credit. You could consider working with a credit counselor to help guide you back on track.

And in more difficult circumstances, you may want to consult the legal professionals at https://www.mccarthylawyer.com/ to negotiate and settle debts on your behalf.

 

More Tips on How to Repair Your Credit

Learning how to repair your credit doesn’t have to be an uphill battle. Use these tips to help you build and stick with better financial habits.

And don’t forget to check back regularly for the latest on credit repair, earning money, and personal financing know-how.