BBB Midwest Plains: 10 tips to repair your credit

Struggling with your credit score? Don’t worry, you’re not alone. Better Business Bureau (BBB) of the Midwest Plains recently held an informative webinar titled "Building Credit: Understanding your credit report and score confirmation", featuring Brittany Planos, Financial Literacy Manager of Union Bank & Trust. Planos noted that many people face challenges with their credit, but the good news is that there are steps you can take to improve it. Here are the top 10 tips to help you repair your credit and get back on track.

1. Check your credit report regularly

   • Start by checking your credit report at least once a year. You can get a free report from AnnualCreditReport.com. Look for errors or inaccuracies and dispute any you find.

2. Pay your bills on time

   • Payment history makes up 35% of your credit score. Set up reminders or automatic payments to ensure you never miss a due date.

3. Reduce your debt

   • Aim to keep your credit utilization below 30%. Paying down your balances can significantly boost your score. Start with the highest interest debt first.

4. Don’t close unused credit cards

   • Keeping old accounts open can improve your credit history length and credit utilization ratio. Use them occasionally for small purchases to keep them active.

5. Limit new credit applications

   • Every credit application results in a hard inquiry on your report, which can lower your score. Apply for new credit sparingly.

6. Become an authorized user

   • If you have a trusted friend or family member with good credit, ask if they’ll add you as an authorized user on their credit card. Their good payment history can positively impact your score.

7. Consider a secured credit card

   • Secured credit cards require a deposit that serves as your credit limit. They’re a great way to build or rebuild credit, as payments are reported to credit bureaus.

8. Negotiate with creditors

   • If you’re behind on payments, contact your creditors to discuss payment plans. They may be willing to reduce your payments or interest rate.

9. Use credit-building tools

   • Services like Experian Boost can add utility and telecom payments to your credit report, potentially raising your score.

10. Seek professional help

    • If you’re overwhelmed, consider consulting a credit counselor. Reputable organizations can help you create a plan to manage your debt and improve your credit.

Frequently asked questions

Q: How long do negative items stay on my credit report? A: Most negative items, like late payments or collections, stay on your credit report for seven years. However, their impact on your score lessens over time.

Q: Can I get a mortgage with bad credit? A: It’s possible, but you might face higher interest rates. It’s often best to improve your credit score before applying for a mortgage to get better terms.

Q: Is it better to pay off my debt in full or settle for less? A: Paying off debt in full is better for your credit score. Settling for less than you owe can still leave a negative mark, though it’s better than leaving it unpaid.

Conclusion

Repairing your credit takes time and discipline, but with these actionable steps, you can improve your score and achieve financial stability. Remember to stay patient and persistent. Your future self will thank you for it!