Many people will slip into a bad credit score and think their life is basically over. First things first, this is a very unhealthy mindset that needs to be checked at the door. Bad credit that has been damaged is a serious issue, but you can come back stronger than ever to rebuild it.
Once you realize what went wrong with your credit, you can begin to take actionable steps to rebuild and get your credit score on the rise. To help with this, we want to outline the steps you can take right now to recover from damaged credit and then provide some bonus tips for making sure it stays on the rise.
Steps to Recover from Damaged Credit
Review Your Credit
Whether you have a leaky faucet or damaged credit, your first step is to find the source of the problem. For bad credit, you need to look at your credit to see what the issue is. Credit does not just immediately get destroyed overnight, so there is likely a series of patterns that has caused the credit to drop so drastically.
Investigate Your Credit Report
All of your credit issues can be further investigated by looking into your credit reports. You can look through your credit reports and get them sent to you one time a year from a major credit bureau. Once you have a clear and outlined history of your credit, you can either accept your past mistakes or look into disputing inaccurate information.
If you feel there has been some form of fraud or misrepresentation, you can try to dispute the inaccuracies in your score. Deletions of certain issues can immediately increase your credit score to at least get you back on the path to better credit. If there were no inaccuracies, then you need to take the punches and move on.
Pay Off Due Bills
If you have not already, you need to pay off the bills you owe immediately. Settling due payments often takes time and energy if you don’t have the funds available, but it is essential to rebuilding your credit. FICO and VantageScore will have the dues shifted to a paid status once the debts are paid and will increase your credit score. Even if your credit score seems like a lost cause, settling due payments will get you to a much better place to start building from.
Make A New Credit Game Plan
Now we get to the fun part: rebuilding. Your debts are paid, you’ve discovered your past issues, and you’re ready to get your credit score back to the top. One of if not the best ways to help you build better credit in the future is to educate yourself and learn as much as possible. From simply paying your bills on time to only spending within your allotted budget, keeping your credit score on the rise takes consistent habits of smart spending and monitoring.
Increase Your New Credit
With your new action plan for smart spending and a more educated understanding of the credit system, you can now look to start increasing your credit score. This process is slow but worthwhile in the long run. This is where you want to start setting up automatic payments for your dues and looking into getting secured credit cards that will allow you to build credit every time you use them. The key to building credit is to make sure you are checking your credit as often as possible so any rise or fall is immediately noticed and can be resolved or celebrated.
Wait as Your Score Improves
Unfortunately for the new and more educated credit user, the process of resolving and increasing a damaged credit score does take time. However, the end reward of having a high credit score unlocks previously impenetrable doors that would have otherwise been impossible for you to enter. It can definitely take some time for your credit to repair itself, so you need to be patient and consistent. Implementing smart habits and practices over time will add up to high yields in the future that will be well worth the wait.
Tips For Maintaining Good Credit
Our first tip for maintaining your new and improved credit is to simply be responsible. This tip is intentionally vague as it allows you to plug your own life into the statement and be responsible where only you know you need to be. Use your old and damaged credit as a lesson and realize where you should have been more responsible in the past so you can now grow and make sure those issues don’t come back to haunt you again. A responsible credit owner is one that is destined for success.
In a similar sense to responsibility, accountability is something that often takes much more inner strength. Being accountable means telling yourself that you alone are responsible for your spending or bill issues as you know deep down that you didn’t really need that new car or vacation across the world. Asking yourself why you are making any given purchase and really thinking before acting will keep you accountable with your spending and help your credit score. If you struggle with accountability, getting secured cards means you need to put your money where your mouth is or your negative credit score will come back again and destroy you.
Use Different Cards
Our last tip may seem counterintuitive at first but having multiple credit cards can be a great way to make multiple streams of credit add up over time. Having one for groceries, clothing, and larger expenses will allow you to only use cards for absolute needs and will help prevent you from buying things you don’t need.
Seeing your grocery card used for a new TV will be alerted to you and you will get a literal reminder that you are making irresponsible decisions. As long as you can now pay off your bills, multiple cards can help drastically. Last but not least, don’t forget that there are outside sources of assistance with debt relief and credit restoration that you can turn to for help when you just cannot seem to wrap your head around where to begin with that process. It can seem to be a daunting task but it is not impossible to get your credit score back to where you want it to be.