Ok, so now that you have corrected all of the mistakes on your credit report, you are at the perfect starting point to really dig in on the do-it-yourself credit fixes. Take a deep breath and prepare for some painful introspection and an honest look at your financial situation. Wait, wait, don’t stop reading! It’s completely worth your time and effort, your credit score will thank you.
Take an hour or so and pull together all of your bank statements, credit card statements and that credit report you pulled after you finished correcting your credit report. Take an honest look at the report, specifically the derogatory accounts section.
What to look for in the derogatory accounts section:
1. Identify the problem -Get out your highlighter and mark up the “derogatory” items. You could see late payments, collection accounts, or a past bankruptcy, foreclosure or short sale items. This will help you pinpoint exactly where to begin your restoration.
2. Interpret the problem - If you have a bankruptcy, foreclosure or short sale in your past there is not much you can do to “restore” your credit. You’ll need to focus on establishing positive credit instead. If the shadow in your past is mostly items like late payments or collection accounts, it’s time to establish automatic bill-pay or payment plans.
Ok so now that the ugly stuff has been covered, it’s time to check out your open accounts section.
What to look for in the open accounts section:
1. Checks for inaccuracies again - Double check your balances and credit lines are correct.
2. Time for math - List your “minimum payments” for all of your open lines and add them up. Now compare with your monthly income. What’s the damage?
Now that you’ve checked in with reality you’re ready to make some changes.
Changes to consider:
1. Tighten your belt - Making the minimum payments may actually be hurting your score. If you can, plan to make a bit more than the minimum payment to each of your accounts. Not only will you pay them off faster, you’ll see a bump in your score.
2. Pick up the phone - If your minimum payments on your accounts exceed your income – it’s time to make some calls. Ask your smaller accounts for an extended payment plan. Your account will likely be frozen or possibly closed; which will initially ding your score. Stay strong; this is a much better option than late payments.
This hour you’ve invested in shaping up your credit score will have lasting affects for years to come. Not only are you fixing your current situation, but following these steps will set you up for a flawless future credit history and establishing good financial habits. Don’t forget, if this seems like just too much or you’re in need of more help for your complicated situation, Praxis Credit Consulting is here to help you!
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