If you’ve ever made a mistake that damaged your credit, you’re not alone. 68 percent of Americans damage their credit before they turn 30.
The good news is that your score can be repaired and you can recover from past credit errors.
Understanding how your credit score is calculated is the first line of defense against damage to your credit. There is a simple calculation that determines your credit score, but not all categories are created equal.
1) Always, always, always pay your bills on time. Your payment history accounts for 35 percent of your score. You cannot correct mistakes from the past, but you can move forward with this new knowledge. If you are not aware of your bill payments, make sure you are aware and try to stay informed. Nothing will affect your credit score faster than a missed bill payment. Make paying your bills on time your #1 priority. Once your good payment history starts to show up in your credit report, you will see your credit score rise.
2) Limit your spending on credit cards. Credit usage, or how much credit you use minus how much you have available, is critical. It accounts for more than 30 percent of your total credit score, and using more than 30 percent of your available credit will hurt your score. Your next priority should be getting all credit card bills to 30 percent (at the very least — we recommend never carrying a balance). Don’t you think this is bad? My credit usage was 32 percent for a month because I had an unexpected car repair, my score dropped a whopping 32 points because I was 2 percent above the recommended limit.
3) Use a credit repair company to extract false, misleading or outdated information from your credit report. Over 40 million people had material errors in their credit reports, you could be one of them. If you haven’t checked your credit report lately, I recommend checking it to ensure accuracy. If there is information on your credit report that is incorrect, outdated, or totally misleading, a reputable credit repair agency can help you remove it.
Everyone makes credit mistakes, but luckily there are ways to correct your past mistakes and move on. By applying the three strategies above, you can see an improvement in your score and in your life! You will see lower insurance interest and interest rates, ultimately putting more money in your pocket.
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