With the credit crunch making more hard than ever to secure a mortgage, it’s never been more vital to make sure that you maintain a excellent credit score. While it is certainly possible to repair your credit after running into distress, the best thing to do is not to allow your credit score to be hurt in the first place. Regardless of if you have a long and well established credit history or have just gotten your first credit card, there are some things which you should know about keeping your credit in god shape and achieving credit restoration after a misstep.
One vital thing to keep in mind is that your payment history makes up about 35% of your credit score. Your credit report lists the last seven years of activity, but it is the last 2 years which matters the most when a lender is trying to determine your credit worthiness. How late your payments are also factors in. While a payment which is 30 days overdue is one thing and is seen as relatively minor, payments delinquent for more than 90 days are a serious problem. Remember, it’s simpler to keep your credit in excellent shape than it is to repair it.
The best thing to do is to have different types of accounts and manage them all responsible. You should have a credit card which you keep a very small balance on (or keep paid off every month), along with an installment loan such as a car loan. If possible, you should have a mortgage too. Having several different types of accounts which you are managing well tells creditors that you are a excellent risk.
You should also avoid applying for any credit which you do not really need. Opening too many accounts (or even making a large volume of inquiries) will have a negative effect on your credit score. You will also be exposing yourself to the temptation to use these accounts; this can get you into distress. By only opening accounts you really need, you can avoid having to use credit restoration.
Get a copy of your credit report and look over it to make sure that everything listed on your report is accurate. If a credit bureau can’t demonstrate that an account or debt on your report is really yours, you can request that it be removed. Any small open debts on your report should simply be paid off. Any larger debts may need to be settled with the creditor.
Contact them and offer them a settlement. In many cases they will reduce the debt, sometimes by as much as half. Work with them to pay off your debt. This settlement will still be a mark on your credit report, but it is vastly preferable to having that unsettled debt on your credit history.
No matter how hard you try to take excellent care of your credit report, you may run into problems. Sometimes things happen which we can’t control for and our credit score is hurt as a result. Don’t let it get you down. If you are determined, you can make credit restoration work for you and get your credit back into excellent standing.