Build Good Credit

Repairing your credit and building your credit history provide you with some essential facts. Your situation will dictate if you can find a way out of any debt problem.

Debt reduction can become very stressful to the point of becoming depressed. In these current tough economic times we don't need to have any additional stress introduced into our daily lives. When confronted, if you acknowledge there is a problem the next step is find a solution.

You will need to do an evaluation of your current status and begin to take some essential steps to begin repairing and rebuilding your credit. You must also realize theses same steps need to be evaluated to reduce credit debt.

Repairing your credit you  will need to become VERY AWARE of Internet rip-off scams. You do not want to complicate an already bad situation and end up going deeper into debt.

Anyone that tells you they can repair your credit in 3 easy steps or fix your credit report in 24 hours "PLEASE RUN"! 

The solution you decide on needs to be researched and find a method that will work for you, now we will look at some of the basics of ways to build good credit and credit repair.

First Let's look at how your credit score is determined:

A weighting model is used generate a credit score.

 35 % is based on your credit history (late payments)
 30 % is based on debt ratio, credit limits vs amount owed
 15 % is based on length of credit history ( older on time accounts are great)
 10 % is based in number of new accounts, inquiries ( new credit could mean financial trouble)
 10 % is based on types of credit revolving, installment, consumer ( a good mix of the 3 is great)
 
How well you handle each of these criteria will determine what range of score you will generate, and what the lenders risk tolerance will be.

Ok here is a pretty straightforward plan to build good credit scores, just keep in mind bad credit doesn't just happen, when you accept this fact you are on your way to building GOOD credit. Remember, be patient, document, and follow-up on everything.

Let's get started...

Begin by cleaning up your credit report. Request your free reports here, review the reports thoroughly and file disputes with each agency that is reporting errors or inaccurate information.

Some things to look for:

 Accounts you pay on time are missing, send proof and tell the agencies to add        these accounts.

 Wrong employment information

 Residency errors

 Misspelling and alias names pointing to you

 Possible identity theft

 Accounts that do not belong to you ( this is big, could be wrong name, city & state etc...)

If you identify any of these inconsistencies dispute them with each credit bureau. This will usually take between 30 to 45 days to correct but be consistent and follow up.

Now, let's get to debt reduction, and how to build good credit.

Start by making a realistic budget to reduce overspending:

 Make a list of all your expenses, keep track of everything you spend or charge.

 Create a budget chart in excel or word, or on a sheet of paper

 Start on the 1st of the month to get clear picture of monthly expenditures

 Track every day separately, keep notes if you are using a spreadsheet on a PC

 Record payments by cash, atm, credit card, electronic bank withdrawal

 List the items paid for food, utilities, clothes, gas, etc...

 Do this for at least 3 months

Add these all up to determine your monthly expenses.
 
Continue to track expenses for 3 months, this will provide a clear picture of where the money is going, it will include monthly or quarterly obligations like car insurance, taxes, holidays, professional services etc...

Next make a list of all income on a separate sheet of paper and track income as it comes in:

 Salaries
 Bonuses
 Interest income
 Pension or social security
 Alimony or child support
 Public Assistance (Food stamps, welfare, unemployment)

After each list the net amount received, receipt of the income (weekly, monthly etc), add all these totals to determine monthly income.

Subtract the monthly expenses, from the monthly income, this will result in your net spendable cash, or identify if you have more expenses than income. If the latter is true you need to make some tough decisions on where to cut down on expenses, or generate more income.

Reducing credit card debt, if you have multiple cards or just a couple. This is a process I have done a few times when my own spending got a bit out of control.

 List all credit card accounts with credit limits, balance due, and monthly payment on a sheet of paper or in a spreadsheet.
Begin with either the highest interest rate or the lowest balance due (whichever is best for you).
I just started with the lowest balance due, it let me achieve a goal sooner rather than later.

 Increase the minimum payment on the card chosen ( project a pay-off date)

 Maintain paying the minimum due on all other cards (On time)

 Prepare to payoff the next highest card balance ( project a pay-off date)

 Continue to due this until you are either paid in full or are comfortable with the balance due

Remember the above on debt ratio to available credit, by maintaining a 30 to 35 % balance due vs the credit limit your score will increase just on this fact.
Another option you may employ is to call each credit card company and negotiate a reduced interest rate, tell them what you are doing, and some will lower your rate.

One very important lesson to be learned concerning the financial crisis, your credit score is the financial projection of your good name. Good scores will save you money in the long haul, but you need to maintain, because a small slip up can be very costly.

In closing, if you need additional resources, or need a honest respected company to help Raise your FICO score , please see  Lexington Law Firm my personal recommendation.

Good Luck !!
Mike

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