Your credit score impacts everything from jobs and apartment rentals, car loans and more.
GREENSBORO, NC – Credit scores can affect everything from the interest rate you pay on a mortgage or loan to your insurance premium. So imagine what it is for the millions of people who have no credit history or a very low credit score.
Consumer Reports has some important tips on the right way to rebuild your credit.
Here’s the kicker: if you want to build your credit, you have to get credit. But how do you get credit if you have bad credit?
An important first step: open a bank account, take out several small loans and make one-off monthly payments, which over time should improve your score.
Next, consider applying for what is called a secured credit card, which means you have secured the card with cash.
You can also ask a family member with good credit to add you to their credit card. Just make sure you have a good relationship with the person because if you miss or are late with a payment it can hurt both your scores.
And if you have debts in the process of collection, pay them off ASAP and make sure you pay all of your bills on time to avoid collections in the first place.
“Once you’ve paid off any debt in collection, many credit scoring systems won’t weigh them down heavily when calculating your score,” says Lisa Gill of Consumer Reports.
And be sure to check your credit report carefully. Dispute any mistakes you might find by sending a certified letter with proof to the big three credit bureaus. They have about 30 days to respond.
Consumer Reports says it is wary of any quick credit service that offers help for a fee. You don’t have to pay to repair your credit. It just takes a solid financial plan and some time.