Part Two: Save Your Credit Score!

Part Two: Save Your Credit Score!

Part Two: Rebuilding

In last week’s blog post, we discussed the first steps you need to take in order to save your credit score. We laid out a number of simple actions such as checking your score, paying down debts, and contacting your creditors. If you began following that advice, then congratulations: you’re already on your way to better credit! The concepts outlined in last week’s article will help you “stop the bleeding” and get back onto the right track. In order to see dramatic improvements in your credit score, however, a bit more patience is required. Here are a few more important steps that, over time, will save your credit score!

• Avoid Taking on New Debts. Many people mistakenly believe that the best way to improve their credit scores is by taking on new debt and then subsequently paying it off. Like many misconceptions, this idea does have a bit of logic to it. For people who are not already in debt and struggling financially, taking on bits of debt and then paying them off is a great way to build credit. This is why you sometimes hear people recommending that young adults open credit cards in order to build credit for later (an idea with some merit but also some risk that we won’t get into now!) The takeaway? Whether it’s a credit card or a personal loan, new debt is not the way to rebuild bad credit.

• Avoid Applying for Credit. Applications for credit are reported to the credit bureaus, and they can negatively impact your score even if you don’t end up taking them!

• Establish Good Habits. In some cases, credit problems can be exacerbated not by wild spending or low income–but by carelessness! This is a very frustrating problem because it is so easy to fix. Use calendars, set reminders, and put as many services and debts on “autopay” as possible. In short: do all that you can to avoid unnecessary late payments!

• Be Wary of Credit Repair Services. “Credit Repair” companies have made big bucks promising to “save your credit score.” There is no doubt that these companies have done good for some consumers who might have had a hard time setting their credit straight. However, it is important to realize that there is nothing that these companies can do for you that you can’t do yourself! With just a little bit of research and effort, you can save yourself the cost of paying a credit repair service.

• Think Long Term. In every financial decision you make, try to have a long-term perspective: will I be able to afford these payments in 5 years? Will I be able to withstand an unexpected expense? Though they may sound simple and obvious, these are exactly the kinds of questions that can save you from making a shortsighted mistake.

Blue Marble Properties, LLC

Here at Blue Marble Properties, we work with homeowners regardless of their financial circumstances. If you are having trouble making payments on your mortgage, a cash-only sale could be exactly what you need to get your financial situation back on track (not to mention save your credit score!) Contact us today to learn more!