We’ve all been there — finances are tight and to make ends meet or to satisfy our retail therapy, we pull out that small piece of plastic and swipe. In the beginning, we only plan to use it in emergency situations or perhaps we just assume we’ll pay it off someday. However, the reality of it is that the emergency situations continue to occur or we continue to just put our expenses on our credit card and eventually, after failing to pay our balances, we get that letter in the mail telling us that we have accrued negative credit.

3 Things That May Not Fix Your Credit

If this has happened multiple times or you have tried to get a loan or finance a purchase and haven’t been able to, you may be wondering what you should do. First, know that there is hope to be able to secure a loan and rebuild your credit. But, you have to do it the right way.

There are a lot of bloggers, speakers, and others with good intentions offering quick fixes or simple solutions. Some of their strategies might work. However, their strategies aren’t always the best way to regain your credit. Here are three common ways that others suggest to heal your credit that may not be as good as they seem.   

Closing Credit Cards

It may seem like the best solution to heal your credit is to get rid of the source of your credit problems — your credit cards. But closing out credit cards with a balance of zero can actually hurt you in the long run. When you close your credit card you are:

  • Reducing your credit limit
  • Decreasing credit utilization (debt ratio)

Putting your credit card in a drawer and never using it usually proves to be better than closing it out completely. Additionally, opening a new card can be a way to improve your credit — it may negatively affect your credit at first, but will most likely go back to normal. The key is using your new card responsibly.   

Paying Less Than You Owe

Debt forgiveness may seem like a great idea — you get to pay less than you owe. But this may not help your credit in the long run. The debt that you owe will usually show up as an unpaid obligation that you failed to meet and will continue to manifest on your credit score for up to seven years.

Get New Loans

Getting a new credit card usually only proves to be helpful when you have all of your other credit cards paid off. Applying for a new loan or credit card requires a hard inquiry into your credit score which can slowly chip away at your credit score as you continue to apply for more and more credit cards or loans.

Unfortunately, many of the quick fix solutions offered to fix credit card debt are not in your best interest. In many cases, improving your credit is simple.

It’s Time to Improve Your Credit . . .  Ways to Make Progress

Now that we have given you the possibly less successful means of paying off debt, let us provide you ways to improve your credit score.

Pay Your Bills On Time

Paying off your debt is, in many cases, that simple. If you struggle to pay your bills on time, it may be time to set up a auto-pay feature that many credit cards and other payment portals offer.  If you don’t have the auto-pay option, use your calendar to help remind you to get your payments in on time. Set a monthly reminder on your phone or write it on the calendar.

Reduce Your Credit Card Debt

It can seem easy to want to just ignore your debt and focus on paying your bills now and not getting into any more debt. However, the longer you ignore your debt, the worse it is going to get — your interest is going to keep building, even if you aren’t paying attention. Don’t ignore your debt — make a plan to pay it off as soon as you can.

Keep Your Accounts Open

As we mentioned above, many say that as soon as you pay off your credit card that you should immediately cut it up and never open another credit card again. However, keeping your credit cards open and your balance at zero or paying off your balance immediately will improve your credit score over simply getting rid of your cards. However, if you keep using your cards, don’t let yourself spend more than you can pay right away.

Only Apply For the Credit That You Need

Even though opening more credit cards can be beneficial for improving your credit score, you should avoid applying for credit that you simply don’t need. Why? Every time you intend to open another credit card, a hard inquiry must be conducted. Each hard inquiry can hurt your credit score. It is usually more beneficial to limit opening new lines of credit to only those that you need or can serve you best.

Work With an Approved Credit Counseling Agency

Paying off debt can be hard. If you are doing everything in your power to get out of debt and increase your credit score, a credit counseling agency can help you create a viable plan. They will usually provide a means to manage your finances and make strides toward getting rid of debt. If you choose to go this route make sure that they are approved by the U.S. Department of Justice.

Enlist the Help of a Credit Repair Company

A credit repair company can be the ultimate helping hand in allowing you to not only get out of debt but also improve your credit score. For a small fee, you can finally break free of a credit score that is keeping you away from getting what you truly want for your life in Fayetteville. When you invest in the help of a credit repair company, you don’t have to do the heavy lifting and can instead focus on paying debt and working towards your future.

Get A Free Quote With the Pros

If you are ready to obtain a mortgage and change your history of bad credit, The Mortgage House is here to help. We are an experienced mortgage brokerage firm and credit repair company that can work with you to create the future in Fayetteville that you want. Visit our website to learn more about us and get a free quote.