Rebuilding credit can seem like a daunting task, but with a few adjustments to life and a careful eye on your habits, you can rebuild your credit.
1. Review your credit report
Reviewing your credit report is the first step. Look for any discrepancies and if you find one, commit to clearing it up immediately. You can get a free credit report on AnnualCreditReport.com weekly through the end of December 2023.
2. Be timely
Make timely payments if you have existing credit card debt or loans. This contributes to 35% of your FICO score. If you don’t have credit, obtain a secured credit card. (see below)
3. Keep credit usage low
Keep your credit card usage as low as possible. The key is to stay below 30%, but ideally the closer to 0% the better. This makes up 30% of your FICO score.
4. Be proactive
- Ask to be an authorized user of someone you trust and has a responsible financial history.
- Ask the credit companies to increase your credit limit.
- Sign up for Self Inc. – this company allows you to open a savings account for a sign up fee and monthly interest, but will report timely, monthly payments to all credit bureaus and, at the end of your term, you have access to your savings.
- Self-report your rent. Experian RentBureau is free but only reports to Experian. There are others which report to Equifax and Transunion but come with a fee. You will have to reach out to your landlord as it’s their responsibility to report.
- Use Experian Boost to self-report your utilities, internet, phone. This is a free service.
- Open a secured cre dit card – you can start as low as $200. Most credit cards have this option.
5. Don’t close credit cards
The length of your credit history matters – 15% of FICO score. Don’t close any credit cards instead autopay a small purchase like Spotify and autopay the credit card monthly.
Mindful Reminder
Rebuilding your credit is not a quick fix. It takes diligence and patience. Use mindful tools to help you along the way. Incorporating a daily walk, awareness of breath, or beginning a home meditation practice can all be helpful to ease the tension. Review How to Create Mindfulness Around Our Finances. If you feel severe anxiety, have panic attacks, or depression, seeking the help of a mental health provider can be useful to process strong emotions.
Seeking Help
If you are depressed, anxious, or have panic attacks, find a health professional who can help you.
Substance Abuse and Mental Health Services Administration (SAMHSA) National can provide free referrals. They are open 24/7, 365 days a year.
If you are experiencing suicidal thoughts, please contact 988 for help. The calls are free, confidential, and they are open 24/7 to help you navigate difficult emotions.
Attend a Workshop
If you are interested in attending an live webinar on improving your relationship with your finances, please visit my events.
Related Posts
Michelle Black, U.S. News (2021). 5 ways to lower credit card utilization. Retrieved from: https://money.usnews.com/credit-cards/articles/ways-to-lower-credit-card-utilization
Bev O’Shea, Nerdwallet. (2022). 6 ways to rebuild credit. Retrieved from: https://www.nerdwallet.com/article/finance/ways-to-rebuild-credit
Haar, Ryan, NextAdvisor (2021). How to self-report to credit bureaus.. Retrieved from: https://time.com/nextadvisor/credit-cards/how-to-self-report-to-credit-bureaus/
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