Your credit score truly matters when it comes to getting loans or a decent interest rate on a credit card. A few bad decisions or bills that you simply couldn’t pay at the time can wreck a credit score. Regardless of how you ruined your credit in the first place, there is hope as you can repair your credit score over time. There are best practices for repairing your credit score as well as what to avoid.
Below will cover what you need to avoid when you are starting to repair your credit over time:
Don’t Talk to Debt Collectors and Don’t Agree to Anything on the Phone
Debt collectors want to pressure you to pay a debt so tell them to send it to you in writing. You do not want to miss rent or a high-interest credit card payment to pay off an electric bill from a few years ago that you forgot about. Below are a few other tips to deal with debt collectors in the more efficient way possible:
- Don’t agree to anything that you do not see in writing in front of you. Do not sign anything where you are not comfortable with the terms.
- Hire financial representatives to deal with debt collectors as they might be able to negotiate your debts down. Paying should be the ultimate goal as this will help boost your credit score instantly.
Don’t Be Passive When You Find Errors on Your Report
There is a chance that there is an error for a debt that you do not owe or has been paid in the past. Luckily, proving this is far easier in the age of being able to look up transactions online. Learning how to fix errors on credit report should be a priority as people do make mistakes. You might find that a vindictive ex put something in your name without your knowledge, confront all of these issues.
Do Not Get into New Debts
Accruing new debts without dealing with your past debts is a recipe for disaster when it comes to your credit score. Below are a few different aspects you need to assess when it comes to your spending habits:
- Are you living above your means? Too much spending on entertainment is a great example of how your budget can tighten up to pay off old debts and avoid new ones.
- Do you really need this? Most people want plenty but do not need items that will plunge them right back into debt.
- Downsizing an apartment is a perfect example of something that can be done to help pay debts and many people live above their means in terms of rental fees.
- If you are going to make a purchase from a business and they run your credit then are hesitant to finance the item, you are likely not going to get great interest rates. The last thing you want to do is pay outrageous interest rates on something like a car or boat.
Above covers a few of the many things you shouldn’t do when repairing your credit. Make sound financial decisions and over time your credit score will increase.