Credit Reports & Ratings Articles

Steps to Good Credit

What you need to do to fix bad credit and get back to financial freedom and good standing.

In order to establish good credit, you must be timely with your payments. Good credit comes slowly and in steps, and it takes a great deal of planning to finally realize the benefits that come along with having a good credit rating.

The first step toward good credit comes with being timely on small loans. These include loans such as small limit credit cards and gas cards. Lenders will not extend large loans to people with no credit history, so you have to start somewhere and work your way up. Take out what credit card is available to you, whether it be a gas card or something similar, and be timely with your payments. Paying the balance off immediately will be of great benefit, most likely increasing your credit limit right away. Doing this process for a few months will show creditors that you are responsible and will increase your credit limit, making available loan opportunities that were not there before.

Once you have established yourself as a responsible borrower, it is necessary to maintain good standing, because bad credit is waiting just around the corner if you begin to show signs of negligence on your credit payments.

Take the following steps in order to maintain the good credit you worked so hard to achieve:

Financial Planning

Make a financial plan. Know what your goals are and how you will achieve them. Know what your balances are and allocate the necessary funds to pay them. Do not rely on future income to pay past debts. Keep up to date and never fall behind, because a snowball effect is forthcoming if you do not have a set course of action.

Repayment Responsibility

Being responsible is the most important aspect of good credit, and you should make it your number one priority. Nothing should take priority over payments on your outstanding loans because it will have a negative effect long term. If you are in a financial bind, be not neglect a credit card payment. If it comes down to the decision of buying new shoes or going out with friends and making a payment on your credit card, the choice should be obvious- pay the credit card. Being negligent will have a long term negative impact on many aspects of your life, so demonstrate good responsibility and make repaying loans your number one priority.

Timeliness with Payments

Being on time with payments has a huge impact on your credit rating. Make it a priority to pay your bills on time. If you start being late on payments, you will get a black mark on your credit report and move in a negative direction.

Consolidate Your Debt

If you have a number of loans with different credit companies, it is a smart idea to consolidate your debt into one. When consolidating your debt, a debt consolidation company will pay off all your outstanding balances and you will repay them, all in one payment. This not only makes it easier to manage, but often debt consolidation companies will have a lower interest rate than your current loans.

Review Your Credit Report

Perform a credit review once a year to see how you are standing and what adjustments you need to make. With the emergence of the Internet, having a credit review done is easier than ever. Many websites offer this service for a minimal charge, and it can be a great asset when examining what you need improve and what you're doing right.

Following the above steps will lead you to a life of good credit and, in turn, will make the financial burden easier on you. It is easy to be negligent, but it is also easy to be responsible. We've outline the plan for you. It is simple and easy to follow, so do yourself a favor and take the necessary steps toward good credit