Bouncing back: the not-so-short road toward credit score repair

I could sit here and try to think of some clever and original way to put this, but I really think that the guys and gals over at myFICO.com had it right when they said that, "repairing bad credit is a bit like losing weight: It takes time and there is no quick way to fix a credit score." While this can surely be upsetting and disconcerting, it is a fact of life, and if anything, it should only serve to further emphasize the point of my last post, which was that establishing credit, and doing it responsibly, is OH SO important.

If, like many Americans across the nation, you happen to find yourself with a less-than desirable score, there are definitely some ways to (slowly but surely) rebuild your profile, and demonstrate to potential lenders that you are a creditworthy and responsible young adult. Luckily for all of you broke college students out there, you proooobably have another couple of years left living within the collegiate bubble to set some positive changes into motion before it's time to do fun big boy and girl things like, say, support yourself and like...I don't know...sign a mortgage?

Anyways, the first step to improving your credit score is, obviously, to pull a copy of your credit report and gain an understanding of the factors that have contributed to your particular score (Duh!). Due to the fact that you have already read through my last post, I am confident that the areas for improvement will be relatively apparent once you start taking a look.

Here are just a few tips that can really help to set you on the right track toward credit score repair:

• If you don't already have a credit card, get one! If you're truly broke, you shouldn't open a card with the intent of going on a really exciting and over the top shopping spree. Instead, do yourself a favor and  do something responsible like buy your groceries each week with the credit card and then pay it off in full when you get your bill using the cash you would have otherwise spent in the first place. A good rule when you're starting out is to try to never charge more than the cash you have in your bank account.

• The older a card is on your credit profile, the more of a positive impact that card can have on your score -- don't think that closing all of your old credit cards will help to improve your situation. I know from my own experience, my oldest card (and thus most valuable to my credit score), is also the card with the most egregious interest rate. I NEVER carry a balance on this card, but I keep it active by throwing small charges on every once in awhile (and then paying them off in full). This leads into the next tip...

• Unused credit cards on your profile will have a negative impact on your score: While you don't want to go and close out all of your accounts, you also don't want to have cards that are just sitting stagnant for long periods of time. If you have 2 or 3 credit cards, make sure you show them ALL a little bit of love. I have two cards with fan-freakin-tastic interest rates, so if I am going to carry a balance on any card, it will be one of those two; however, even my nastiest card deserves a charge from time to time.

• Pay your bills ON TIME!!!! This one should go without saying, but payment history can make or break you. Lenders want to see that you are capable of making regular payments on your debt, and that they will be on time. If you struggle with time commitments, do yourself the abso greatest favor and set some google calendar reminders, or sign up for auto-pay with your credit card company. So worth it!

• Finally, don't over do it: having 2-4 credit cards, each with a different type of rewards program, is pretty normal. Having 5..6...7+ credit cards is definitely not okay, and if you find yourself with that many than I would suggest seeking out a legitimate credit counselor because you may have a serious problemo on your hands. Also, you never want to be maxing out these cards. If you have a total credit limit of $5,000, this does not mean that you are in the clear to go buy $5,000 worth of nonsense. You want to keep your debt around 20-30% of your total limit (and never more than 50%).

So anyways, sorry for the lengthy post. What can I say? I just get so excited about credit scores!!!!! As always, please leave me a comment or drop me a message via the contact box in the right sidebar. Next week I'll be reviewing slash promoting a really cool online tool to help you build a budget, and keep track of your finances. 

I leave you with this: