Having a good credit score isn't the most important thing in life but it can seem like it is when you want a loan
. Without a decent score it is almost impossible to get a mortgage to buy your own home. Sometimes circumstances conspire to ruin a credit score. But, there is no need to be dismayed it can be rescued with a little forethought and determination.
Fate can sometimes step in and ruin a score even for people who have been careful with their money. An economic downturn causes businesses to fail and employees to lose their jobs. A serious accident can have the same result. People in these circumstances often max out their credit cards when they have no other income to rely on.
You need to make the minimum payment each month on all your debts to begin improving your credit score. To do this requires an understanding of how your total debt is made up. Break it down by lender and type of debt. Then find out what the terms and conditions are, how much you owe and the interest rate applicable. Put aside the money to meet the minimum repayments before you pay for anything else.
Often a lender will be willing to negotiate an interest rate and put in place a repayment plan. They will only do this though if you take the initiative to call them and discuss your situation. Don't be intimidated, the worst that can happen is they deny your request. But if you do get a better rate it will mean you have less debt to pay overall. And, you will be able to pay off your loans more quickly.
Paying the minimum payment helps your score a little but it will not reduce the total debt or get your score back to a respectable level. You will need to find ways to cut your daily spending to pay more off your loan balance. For compulsive shoppers this will require dedication and determination. Pay the loans with the highest interest rates first. And, don't wait for the repayment date. Pay it down as soon as you have it.
When you have cleared a credit card of all outstanding amounts don't close it. Use it to pay for things you would usually pay cash for. Put the cash aside and then pay it all off on the due date with the cash. Using the credit card for small amounts and paying it off in full will make a big difference.
Get a free credit report online and set goals and targets to achieve the credit score you want. Then check it every six months. You can get a free report once every six months. You should not have to pay anyone to get it. Seeing your progress will encourage you to stick to your plan. It may be slow at first but it will get better more quickly as you pay down your debt.
When you decide you need to repair your credit score it is not difficult to do. But, it will probably require that you change your spending habits. If your resolve is strong, it may take a little time, but you will succeed.