How to make your credit score great again

Good credit score is one of the foundation stones when it comes to building your financial wellness. It doesn’t matter if you end up working for a corporation or running your own business you will need to have good credit in order to grow and advance in life. These days many employers will pull your credit and it’s one of the determining factors when making hiring decision. Or if you start your own small business your personal credit score will determine your business credit worthiness in the initial years. Lots of unforeseen things can make your credit go sideways – huge medical bills that go into collections or job loss can leave blemishes on your credit report. Is there a fix for that? Can it be done quickly? Let me walk you through several basic steps on how to fix your credit. One thing to emphasize is that credit rebuilding process is not fast. It takes time, commitment and discipline: <p>&#9632 Never hire one of those “Credit Repair” companies. They will take your money, lots of it and eventually won’t do anything different than you could have done it yourself. It’s your personal credit and there is really no quick, third party fix available in the market. <p>&#9632 First of all you have to have a job or other income source because this is the very basis of repaying any debts. Without income or cash flow you won’t have the ability to repay those debts therefore your credit will suffer or best case scenario you won’t have any credit. In our next post I will cover tricks and tips on how to prepare yourself for an interview which ultimately will lead you to a job. <p>&#9632 Once you have cash flow coming in on a monthly basis you need to clean up whatever negative stuff you have on your credit report. If it’s bankruptcy, repossession or foreclosure it will take 5 to 7 years for it to drop off your credit report. In those three cases only time will fix your credit. If it’s unpaid medical, alimony, child support, utility bills, unpaid taxes, charge offs, other bad debts or judgments you need to pay those. Based on the amount you can negotiate repayment plan with each creditor a payment plan and then you need to stick to it. <p>&#9632 When you took care of that negative stuff on your report now you need to continue to pay all bills on time. Of course you need to maintain your job or keep your business afloat so you have that cash flow coming in because cash flow is the king. <p>&#9632 Keep your oldest credit cards open even if you don't use them. It helps to maintain established length of you credit history. <p>&#9632 If you are shopping for new credit car, car loan or mortgage don't submit 10 + applications since it will have negative affect on your credit score. Submit two or three applications. <p>&#9632 If there are errors and wrong reporting in your credit report you have a right to dispute those. You will have to do that by contacting each one of three main credit bureaus - Equifax, Experian and TransUnion. It's very important to keep and eye on your credit score and check it at least ones a year and not when you are about to borrow money. You can always request one free annual credit report from each credit bureau by visiting <p>&#9632 Lastly never overextend yourself or push yourself to maximum borrowing limits. Either it’s personal loan, car loan or a mortgage try to stay within normal lending guidelines. For example FHA has set up mortgage lending limits at 31% debt to income on mortgage alone and 43% for total obligations to income. Some lenders will allow you to go above those limits. In real world try to stay below those limits even that new fancy BMW or nice hose on the lake look so appealing. Always remember one thing if your job or business goes through recession or some other hiccup and your cash flow has negative impact a lender won’t care about that. Bank will only care about that timely monthly payment on the loan which in return will keep you credit score positive.