Looking for ways to raise your credit score? What you need to do is very basic, but it’s not easy to accomplish. We wind up with credit and debt habits that can be very hard to break, even for people who find themselves in major financial trouble. If you are sincere when you ask, how to raise my credit score, there are a couple basic, simple steps that you can begin to put in place, to get a handle on bad credit and debt, and start putting some money aside for emergencies.
First, write a budget. Yes really. So many of us claim we hate to do this! But there is no way to know where you money is going, where it needs to be spent versus where it’s just being wasted. Even if you just have big, general categories, like “housing”, ”clothes” , “food”, “utilities”, and “entertainment”, you can get started. Make sure you also have a “savings” envelope too, and add some money there each month. To raise credit score, you will have to start understanding where your money is going.
Put an estimate of what you need for each item, and then put your paycheck into envelopes for each of this categories. Only spend the cash you allocate into each envelope. If you run out in one, borrow from another, but do not use credit cards! Once you have this basic budget in place, you can list on the envelope what you’ve spent the money on. Later, take some time to decide whether your expenditures were on items you needed, or whether you could have skipped them. The items you didn’t need are “discretionary” as opposed to “necessary”, and that’s the fat in your budget you can cut.
A good next step is to cut your credit cards up. This way you won’t be tempted. To raise your credit score, you will have to reduce you use of credit. It’s very likely that your bad credit comes from either having balances that are too high or over limit, or late payment sin your credit history. By cutting them up, you won’t be able to use them. You may want to actually close those cards that have zero balances on them too.
The last quick step is to figure out how much you owe on each credit card, what interest rate you are paying and whether you are current or past due on each. If you can’t make the minimum payments, or bring a card current, you will want to call each credit card company and negotiate a payment plan you can afford, or see if they will remove fees and penalty charges, or lower your interest rate. Each month, pay your bill on time. If you are past due on any balances, use your discretionary spending savings from your budget, and put that extra cash toward your balances until they are current, or even better, paid off.
The budget process will help you raise credit, because this is where you will be getting the extra money to pay off your debt. Paying off debt and keeping current is what raises your credit score, so these steps are closely connected. After you start to see the light at the end of the tunnel, you can find other ways to bring in extra money and get those balances paid off fast.
