New Years Resolutions: Fix Your Credit

2008 is here and it’s a new year, this can be the year you turn that bad credit history around once and for all.  It won’t be easy, it will take on lot of discipline on your part, but like any other New Years resolution, if you stick with it you will be successful.

I already know what you’re thinking, it’s too hard, my credit is so bad there is no way I can turn it around.  You have to look at it this way, even though your credit may be trashed, if you don’t start working on it today, you will still have the same bad credit years down the road.  So now is the time to get serious and start repairing your credit.

Let’s start off with something easy and free, like getting your free credit report.  In an earlier post on this blog I included information on how to get a free credit report, the credit reporting agencies are required to provide you with a free one every year.  All you have to do to get this free report is go to annualcreditreport.com this is the best place to start, not only is it free, but will give you a roadmap to work from.

Once you have this credit road map you need to devolop plan like you would with any other map.  Start your trip with area’s you would like to work on first and a good place to start is at the top of the credit report with your outstanding collections.  I’ve seen this time and time again, a list of collections that take up over half of the first page with $10 to $30 balances.  This is where you need be consitent and have a plan, work on paying these collections off over a three of four month period.  Some folks have larger balances in collections, but a majority of the time there are also several smaller ones in there too, make the effort on paying off the small ones and work out a long term plan on the bigger ones.

You have to remember the collection accounts are right at the top of your credit report, when you pay off the collection accounts they will report as paid.  Now this negative has been turned into a positive, when a lender sees “paid” instead of a balance due in that column, it shows you are making an effort to clean up your credit and now you start looking like a better risk for a loan.

The whole purpose of this blog is to help our credit challenged customers understand their situation and give them practical ways to improve their credit, so now it’s time for you to give us some feedback.  Please post your comments letting us know what you like so far and any suggestions for topics you would like covered.

In my next post, I can cover the value of an account that is paid on time and what that can lead to, or I can cover what you can do to improve your odds of getting approved for financing.  Let me know which one you would like next.