Making the decision to repair bad credit can be one of the most challenging yet life-changing decisions you will ever make. After dealing with being turned down for credit and hounded by creditors you can't pay, learning to use credit wisely will be a new path that offers a breath of fresh air to anyone who is focused on prioritizing credit repair.
If you want to prioritize credit repair on your list of things to do this year, here are three things you should focus on to make sure that happens:
1.) Pay on time--every account, every month. Your ability to pay on time accounts for 35 percent of your credit score. Utilizing credit wisely begins with staying within your financial means. If you are able to pay your bills every month on time, this means that you have the financial means to match your lifestyle habits and is the first step in rebuilding a solid credit history.
2.) Balance your credit utilization ratio. The magic number to remember here is 30% and in order to repair bad credit, you need to keep that number in mind at all times when looking at your credit usage. You should make sure that your overall credit usage on all credit cards is 30% or less of the limit. For example, if card A has a $5,000 limit, you should never allow your balance on that card to exceed $1,500. Regardless of how many cards you have, if you maintain this formula for all of your cards, you will see a dramatic improvement in your credit score. However, going over the 30% threshold will cause your credit scores to suffer and approaching the limit or going over your limit will cause your scores to take a serious dive.
3.) Show long-term improvement. Time will be the most influential factor on your credit score. When you are able to show that you have successfully managed your credit over an extended period of time, potential creditors are much more likely to view your credit history favorably when considering you for a loan. Credit worthiness is not an overnight accomplishment and a person's good credit takes years to build. But with correcting the misinformation being reported on your credit reports, bolstering what is being reported and showing patience, discipline and wisdom, your credit score will eventually reflect your effort if you stay focused on maintaining and improving it.