When you have bad credit including a low credit score, you know how difficult it can be to borrow money from a lending institution during an emergency. Bad credit can hurt you in every aspect of your life, and prevent you from obtain certain things that you may want in the future like a home, or a new car.
That’s why this article you’re reading will provide you with three important steps to rebuild your credit to good standing(between 720-790 credit score). This is very important because certain jobs look at an individuals credit profile, which could prevent you from getting a the job that you applied for.
Now before we start, our ultimate goal if at all possible should be to pay everything off immediately and not use credit at all. But sometimes credit is a necessary evil.
So here are the three debt elimination steps you must do to rebuild your credit.
Pay your bills on time– If you I had to choose one out the three steps, it would be this one. Better yet, pay your credit card bills a week early so that you are sure they will arrive before or on the due date. If you need don’t have the money to pay on time, then you need to find another job that pays more, or a part time job, or cut back on some you variable expenses. The last resort would be to contact the credit card company and negotiate a payment you can afford.
Establish Credit– Obtain a secured credit card, put some money on it to get a credit limit, and use that credit card to make some necessary purchases. By doing that, it will start re-establishing your credit. Start charging very small amounts and then pay them off. You can carry a very small balance if you want – $20 or $25 – but NEVER make your monthly payment late. After a year of doing this, you will see your credit score rising a little bit, and you will also be able to apply for an unsecured credit card. card.
Debt-Equity Ratio– The lower your debt to equity ratio is the higher your credit score will be. Most credit card debt elimination counselors recommend that you should exceed thirty percent of your credit limit on each account. For example, if you have a credit card with a $5000 credit limit, then there should not be more than $1500 of purchases on that one account.
Hopefully these three steps this article has provided to you will help you rebuild your credit, and get you out of debt.