Most people come into bumps on their financial road. You’re not alone if you’re looking at a credit score that you’re not exactly proud of. On the radio and television you are bombarded with ads from companies that promise to fix your credit score. The thing is that you don’t need to pay someone more money to fix your credit score. Not only are these companies doing what you can do on your own, but many of them have unscrupulous business practices. By following three simple rules, you can turn your credit score around on your own.
Organize Your Bills
This can be a really daunting task for many people, but once you accomplish it the action will make you feel empowered. The best way to organize your current bills is to wait for them to arrive. Open them up and lay them out over the course of the month. Find whatever way that makes sense to you. Most people have online money management systems or use spreadsheets to keep their bills in order. Separate your revolving bills (things like utilities and rent) from your static bills (credit cards or loans). Write down what your monthly payment is and what your balance is. Don’t be intimidated by the numbers, you’re simply getting everything in order.
Find hidden Debts
Many people have hidden debts and expenses that they don’t know about. The most common thing that people forget about is medical bills that they accrued as a teenager. To locate any bills that you may not remember you should look up your free credit report score. Everyone is entitled to at least one free credit report from each reporting agency once a year. The major credit report services are Experian, Trans Union, and Equifax. When you review your credit report, keep an eye out for any errors or things that you don’t think are accurate. If you have discrepancies in your credit report, you can write each reporting agency to have the errors corrected or removed.
Smallest to Largest
Something that people tend to do is focus too much on their interest rates. By doing this, you may get into the trap of throwing good money after bad. The first step is to pull aside your revolving bills and make sure that you remove those numbers from your income. You will be left with what is called your net monthly income. Only work with your net monthly income so you don’t accidentally overspend.
Arrange your static bills from smallest to largest and pay them off in that order. Pay as much money as you can afford to that smallest debt every month until it is totally gone. When you move onto paying the next one, you will have more disposable money to pay at the next one. This has the added benefit of a quicker payoff, when you see yourself making a difference in the number of debts you have you will be less likely to get discouraged. By doing this you will pay your bills off faster and loose less money in the long run.