by Michelle Oliver
Rebuilding credit is on many of our agendas these days. The economy has put a tremendous damper on the finances of many people. During economic turmoil, fewer work hours and unemployment affect one’s ability to meet daily expenses. In order to make ends meet, people may rely on credit cards and lines of credit. If you’ve fallen behind in payments, there are a few steps you can take to get back on track.
Obtain your credit report.
You can get your credit report free yearly at www.annualcreditreport.com. There are three credit reporting agencies so you can order from all three. The free report does not give you your credit score; this report will give you your debtors. You can check for accuracy on your report. If it is not accurate then you can contact that reporting agency to dispute the discrepancy. This report will also give you complete information about your credit history for 84 months (seven years). Once you have completed this step then you can now tackle how you are going to get rid of your debt.
Create a household budget.
This is a must because you need to see and know what is coming in your household monetarily and what is going out. You may find that you are overindulging in some things like entertainment or dining out. This is where you can start making changes accordingly. Make sure you keep track of all of your spending for the first couple of weeks by saving your receipts. This will serve as a reminder that you are working on your budget and also remind you of your spending habits.
Start paying the most on the highest interest rate revolving credit line first.
A misconception is that it’s best to pay the highest amount down first. Not true. Again, pay your highest interest rate, revolving line of credit first! Installment loans should be paid on time but the revolving lines of credit will rebuild your credit quicker. Pay the minimum on your other revolving lines of credit and once you have paid off the highest then go to the next highest and so forth.
In order to rebuild your credit you have to be disciplined, have time and patience, lots of positive energy and be ready to work out your negatives and turn them into positives. These three critical steps of checking your credit, planning a budget, and paying off your highest revolving line of credit first, can lead you to a wealthy lifestyle for years to come.
