Repairing Your Credit

Your credit score may not be where you want it. Thankfully, you can fix it! Start today by learning about things you can do to repair your credit.

Check Your Credit Report

Begin by reviewing your credit report. Follow the steps below:

Get a report from each of the three credit bureaus by going to annualcreditreport.com. This is a federally sponsored website that provides you one free credit report from each bureau annually.
Check your personal information (address, names, birthdate, etc.) and make sure it’s accurate.
Review your payment history. Late payments have a huge negative impact on your credit score. Make sure there are no errors that show your on-time payments as late.
Review your open accounts. Make sure they all belong to you. For the time being, keep older accounts open even if you don’t use them. They help establish your credit history, which factors into your total score.
Look for any judgments or collections actions against you. If there are any you don’t recognize, make sure to dispute them.
Review the credit inquiries on your report. Applying for new loans or lines of credit will create “hard inquiries” when the lender pulls your report. This can negatively impact your credit, so avoid applying for more than one or two lines of credit in any six-month period.

If you find anything wrong on your credit report, follow the credit bureaus’ steps to dispute those claims. The credit bureaus will require the reporting lender to verify the information. If the lender can’t verify the information it will come off your report.

Plan to review your credit report from each bureau at least once annually. One strategy is to use the annualcreditreport.com site to check a different bureau once every four months. This way, you can monitor your credit report throughout the year.

Pay Your Bills on Time

Missed payments will hurt your credit score. Lenders want to know that they can rely on you to pay back the money you borrow. One of the easiest ways to prevent missed payments is to build a budget and set up automatic payments.

Determine how much you can pay each month. Consider paying more than the minimum to reduce your long-term costs.
Set up automatic payments. That way, they will never be late. Automatic payments are easy to set up with Horizon’s mobile and online banking!
Verify your payments will post in time by checking your account a few days before they’re due.
If you can’t set up an automatic payment or scheduled transfer, be sure to utilize the lender’s alerts so you know when your payment is coming due.

Reduce Your Credit Card Debt

To have a good credit score, your credit utilization needs to stay under 30%. Find your credit utilization by dividing your total credit balance by your total credit limit. If the number is over 30%, you’ll need to reduce your debt to improve your credit score. There are many different ways to reduce debt, but some concepts are universal:

Make a plan for your money. It’s extremely challenging to save money and pay off debt without understanding your income and expenses. If you need help creating a budget, start here.
Consider where you can cut back. You could bring lunch to work a few days a week instead of eating out. Or narrow down to two streaming services instead of three or four. Every bit counts, and small, consistent savings will add up over time.
You may need to increase your income. One way is to start a second job or a side gig. Even a couple hours a week can make a big difference in the long run.
Whenever you can, pay more than minimum payments. This will reduce the amount of interest (the fee you pay for borrowing money) you pay in the long run.
Keep your eye on the prize! Debt can feel overwhelming, and having the discipline to pay it off may feel unpleasant. Remember that once you’ve got your debt under control, you’ll be able to use and enjoy your money without fear or anxiety.

Want to learn more about personal finance? Ask us about a Financial Trek Check! We’ll help you create a personalized money plan with specific action items and educational resources. Then we’ll follow up to track your progress. Visit your local Horizon branch or call us at 800.852.5316 to get started today.

Read more articles like this on HZCU’s Financial Knowledge Hub.