Rebuilding Credit One Step at a Time

Overusing credit cards can easily lead to a negative effect on your credit score. If you find yourself in this situation, it is important to learn the best ways to improve your credit score so that you will be eligible for loans in the future. The steps below will tell you the best ways to use your credit cards to help repair your bad credit.

Step One – Pay bills on time

The first thing that you should do is to pay all your bills on time. Having past due credit card bills can add fees and additional interest payments to your statement, but they can also cause your credit score to go down dramatically.

You should also make sure that you pay all other bills on time as well. While it is important to maintain your credit card payments, it is also important to pay any other bill that you may have on time as well.

Step Two – Eliminate Unnecessary Credit Cards

If you have credit cards that you are not using and that really have no benefit for you, write a letter to your credit card companies. Ask them to cancel the cards that you have and request that they report this closing to the three major credit agencies. If they remain attached to your credit report, they will still be affecting your score, so it is important that the agencies remove them from your report.

You can also ask your creditors to lower your credit limits. Even if you owe nothing on these credit cards, lending institutions consider the entire limit amount when they are factoring them into your eligibility for a loan.

Step Three – Use Credit Cards to Build your Credit

Once your credit cards are paid off, you can begin using them to help improve your credit. Start by making small and regular purchases on them. You should then make sure that you pay them off on a monthly basis. This will help you to build credit if you have none and will begin the process of repairing your credit if it has been damaged. You may want to consider a secured credit card during this rebuilding process.

Obtaining a small loan can also help improve your credit. You should consider having a family member cosign with you so that you are able to secure the loan. You can then make regular payments until it is paid off. These are two of the best ways to improve your credit.

Step Four – Keep an Eye on your Credit Report

Every year, you are allowed the benefit of receiving a copy of your credit report from each of the three major credit reporting agencies. You should take advantage of these free items and make sure that you are watching for any errors that may appear from year to year and have them corrected as soon as possible.

Although credit cards have the ability to ruin a person’s credit, they also have the ability to repair it as well. If you are looking for a way to improve your credit score, these four steps will help you do so quickly and simply.

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