Credit Fix: The Five Credit Fix Commandments

Credit Fix Commandments

Repairing your credit takes a lot of hard work and discipline. Once you are on the path to financial health, make sure that you stay there by carefully managing your money and debt. In order to protect your credit in the future, abide by these five CREDIT FIX commandments:

Thou Shalt Not Ignore Creditor Notices

It can be really tempting to cram those menacing window envelopes in a desk drawer and decide to deal with it “later.” The problem is, later never comes. Open and read all communications from creditors as soon as they arrive. If it’s for something that you do not owe, you need to get it removed from your credit record immediately. If you legitimately owe the debt, you need to write and make payment arrangements to save your credit rating.

Thou Shalt Put Aside Cash for a Secured Loan

While rebuilding your credit, you may have to demonstrate to creditors that you can now be trusted. Getting a secured credit card or a secured loan from your bank, and managing that card responsibly, is one good credit fix. Put aside $10 or $20 a paycheck so that you have a deposit to put down when you are ready to apply for a card. Don’t forget to account for any possible fees for opening the account. These are sometimes due up front, but are more frequently added to your first statement.

Thou Shalt Not Charge What You Cannot Afford

Never make a charge to your credit card for which you do not have the cash in hand. Do not charge an item you want with a vague idea that you’ll pay it off over the next couple of months. Check your budget and finances before adding any debt of any kind.

Paying only the minimum on credit cards can add substantial costs as interest piles up. And, should you charge so much that the minimum payment is higher than you can afford, you risk falling behind or even going into default.

Thou Shalt Not Apply for Too Many Cards at Once

Each time you apply for a card, it has a small negative effect on your credit score. Do not apply for too many, especially if you are getting turned down, as it can look like you are trying to live beyond your means. And, never apply for a card just to get some sort of bonus or freebie. Judge each offer based on the fees, benefits of the card, and the interest rate offered. A freebie can wind up being very expensive, especially if the card itself has high annual fees or an undesirable interest rate.

Thou Shalt Set Up Automatic Payments

For every credit card and installment loan that you have, set up your account so that at least the minimum payment is automatically withdrawn from your bank every month. This way, no matter what else is going on, you can ensure that you never get a red mark for a missed payment on your account.