If you are reading this, it is highly likely that like most Americans you are struggling with your FICO score. However, you are not alone and this is not solely your fault. People are still feeling the debilitating effects of the 2007/2008 economic meltdown, which means your credit score must have suffered during this period.
Grim Debt Numbers
A New York Federal Reserve’s Household Credit Report reckons that the average household credit card debt is $15,611 while average mortgage debt stands at $155,192. The picture gets grimmer as the report adds that as of January 2015 total consumer debt was an astounding $3.34 trillion.
Indeed, a study by National Foundation for Credit Counseling (NFCC) shows that more people are embarrassed to reveal their credit scores than their weight; this being America, then there is a problem.
Reason to Cheer Up
There is an old saying that goes like this “when you are in a whole, stop digging.” This is the best advice you will ever get in getting out of your financial rut. With your FICO score damaged, getting financing for personal or business purposes is nigh impossible.
However, there is a reason to cheer up despite this gloom; how so? By following these simple tips, you can start repairing your credit score. Take a look:
1. Check Your Credit Report
If you have tried to ask for financial help from any institution, it is highly likely that your request was declined. Before making more assumptions, you need to get your credit report, which is available free of charge. This is where your battle starts by looking for any errors and reporting them to the credit bureau.
2. Start Paying Bills on Time
Late payment is one of the major reasons your credit score is tattered and it is high time you set reminders or requested a standing order to make prompt payments. Any missed payments must be current in order to avoid more fines and further ruining your FICO score.
3. Retain the Good on Your Report
If you had a mortgage and paid it off, don’t try to get it off your report. The bottom-line is that anything negative hurts your score but anything positive including paid off debt is good. It shows reliability and this is something that aids your score upwards.
4. Get Professional Help
Before you say it is expensive, consider the options on the table. There are myriad loan assistance programs including counseling, loan consolidation and negotiation among others. Most of these programs only charge you when you are out of the woods and the issue of cost does not thus arise at the beginning.
These professionals will help you look at your current financial situation and then come up with ways of reducing your debts progressively. Such input is invaluable in improving your FICO score.
5. Leverage Your Credit Cards
This is one of the most debatable points but it will do you good to have one or two secured plastics. The point is to avoid overcharging them or delaying payments. At the same time, make sure you underutilize the cards, with a utilization rate of 10% being ideal in the battle to improve your score.
Of course, there are so many other suggestions out there but remember; it all boils down to financial discipline. The trick is in avoiding pitfalls that trapped you initially and always seeking fresh ideas from an expert.