A beginner's guide to credit score repair

Repairing your credit score can be a long and tiring process. Low credit scores can affect your reputation and will inevitably cost you higher interest rates in the future. Thus, it is necessary that you know how to repair credit card ratings in order to get full advantage of financial intermediaries and lending companies.

Look at where you stand

Before going into the actual process of repairing your credit score, you should first look and reassess your current situation. Examine your personal financial statements like your bank statement and your credit card statement. Ask for copies of your credit history and credit report, and list down your debts to personal creditors. Gather and study all financial resources that you can get so that you'll have a clearer picture of your credit and financial status.

Whatever you do, don't cancel your credit cards

One of the biggest mistakes people commit when repairing their credit score is cancelling their credit cards. Needless to say, cancelling credit cards won't help. It can actually result into further damages to your credit reputation. The best thing to do is to lock away your credit cards somewhere, possibly underneath your closet or in a locked box.

Write down a plan on how you can pay your debts

The primary purpose of repairing your credit score is to get you out of debt. Hence, you should plan on getting out of debt by paying all your obligations in a consistent manner. Simply write down a plan and stick with it. Allocate at least 15 percent to debt settlement each month. Before you know it, you are debt-free.

Always pay your bills on time

Paying your bills on time is critical when you are out to fix your credit score. Never delay monthly bills especially utilities like energy, telephone and water fees. Similarly, paying bills in advance can also help to improve your reputation and relationship with creditors.

Create a monthly budget

Creating a monthly budget is necessary especially for people who would want to improve their credit score. A monthly budget should be put in writing and clearly distinguishes a need over a want. You should also separate fixed and variable income so that you can intercept expenses of different natures. Effective budgets can help, not only in improving your credit score but for opening the opportunities for financial freedom as well.