Good things come to those who wait. Haste makes waste. The tortoise beat the hare. However you say it, patience is an important virtue, especially when it comes to improving your credit. There are no easy shortcuts, but there are several simple things you can start doing today that will help get you back on track.
1. Check your credit report regularly.
Reviewing your credit report is the best way to make sure all your information is accurate and up to date. If you find incorrect information or clerical errors, report them to the credit reporting agency that supplied the report as quickly as possible.
2. Get help from the experts.
Contacting your creditors or a credit counselor can help you create a plan for the future. Make sure to stay away from credit agencies that promise to "improve your credit" by removing negative information from your history. Unfortunately, negative information that is accurate cannot be removed that way.
3. Focus early on the things that are late.
Prioritize the steps you take with special attention paid to the items that negatively impact your credit history the most, such as late payments and collections. Getting caught up on your late payments and consistently paying them on time in the future will help your credit score.
4. Work on solving your revolving credit.
Revolving credit, a term generally used to mean credit card debt, typically has very high interest rates. Paying it down instead of moving it around between different credit cards can help improve your situation.
5. Understand what "closed" means.
Closing an account or paying off a collection account will not erase the information from a credit report. Your credit history will still reflect the impact of those items. Keep in mind that in some cases having old, but well managed, accounts on your report indicates a longer history of being responsible with credit.
6. Open accounts based on need.
The different types of credit you use can positively factor into a credit score, but you should avoid the temptation to open new accounts as a way to have a better "credit mix." Assess your needs and open the accounts that make the most sense for your personal situation.
7. Go slow if you're new to credit.
Credit scores consider the average age of all your accounts. Opening a lot of new ones too quickly will lower your average account age and impact your score if you don't have a well-established credit history.
8. Strive for stability.
Lenders look for employment and residential stability when reviewing applications for credit. Staying at one job and one address can help you get better credit offers over time.
9. Build good credit with good habits.
Like everything else in life, you get out of credit what you put in. If managed properly, credit cards and installment loans can help improve your credit.
Above all, realize that changing your credit situation is possible. Millions of people work on improving their credit every year, and so can you. If you'd like to learn more about your credit score, read The 5 Building Blocks of a Credit Score. For background on credit reports, check out our Quick Guide to Credit Reports.
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