We have all been there, and maybe we are there now. You have something happen that throws everything out of balance. Job loss, emergency medical needs, or a water pipe in the basement bursts open. Either way, no one means to fall into debt. Below I will show you the top ways I have used to rescue my credit when life happens.
Don’t open more – It can be tempting to open a new card with an “introductory offer” but this is a bad move. Generally, you want to keep your credit usage down to about 30% of what you have available. So if you had to run up a card balance or three, it can seem like it would help to open a new card but this puts a hard inquiry on your report. These hard inquiries can drop your score by up to 10 points or even more. It is better to call current creditors and ask for a reduction in your interest rate. Most debt reduction companies offer to reduce your interest rate, what they don’t tell you is that you can do that all on your own.
Look at your report – With the introduction of sites like Credit Karma you can keep tabs on your score on a regular basis but you need to go a step further. Reach out to www.annualcreditreport.com and get your full report in a downloadable PDF format. You can then comb over the information there and look for errors. Which brings me to another point.
Dispute any errors – The three major credit reporting agencies have an area to dispute an entry on your report, use it. Be as specific as possible and explain why this is an error and ask them to remove it. For more info on this and how it all works click here.
Pay more than the minimum due – Even if you can only pay $20 more per month this will show more favorably with current accounts and they will report it for you. When a creditor is reporting on your report they will show the minimum due and then the amount paid. This can raise your score up to 50 points or more in just a few months.
Reach out to a family member – No not for a loan, for two things. First advice, chances are your parents, grandparents or aunts/uncles probably have amazing credit scores from years and years of hard work. Tap into that and see if they have any tips or tricks for you. Second, ask them if they are willing to make you an authorized user on one or more of their older accounts. Explain that you do not want the card. You will still reap the rewards of their good habits and in some cases, the credit agency will backdate the payment history to your file. This can be a huge jump for your score in a matter of a month.
Following these simple steps that have worked for me (more than once) can help you get back to Loving the Journey.