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5 Steps to Help Rebuild Your Credit Score

5 Steps to Help You Rebuild Your Credit Score

Your credit score is your numerical representation of your financial credibility. It is a three-digit number attached to your name that provides lenders and renters with a quick statement on your ability and reputation to pay bills on a timely basis. As time passes, the majority of people run into situations that might set them back and occasionally drastically affect their credit score. This leaves them in a place where they are rarely qualified for a loan, or even have a hard time renting a place of living.

If you have the patience and determination to do it, these 5 tips will give you a roadmap on how to rebuild your credit score and fix your financial credibility.

Step 1: Evaluate Your Current Credit Score

Every person’s situation is different; as well as every person’s credit score. There are different reasons your score is where it is, and often times it can be an incorrect representation of your current financial status.

The key component to rebuilding your credit score is being honest with yourself. You need to know what outstanding bills you have out to pay, if you have ever had a payment sent to collections, and you need to address any other current/past problems rather than ignore them. Utilize the free credit report systems that are out there, and start to build up from where you realistically are.

Step 2: Layout all payments you currently have and will receive in the near future

The past is the past, and there is no way to travel back in time to change what has happened. What we can do is make a plan how we will recover from our past mistakes and how we will plan to execute more efficiently and on time in the future.

Lay out the outstanding bills you have to pay, the bills that you have to pay in the future, and make a plan on how you will budget your income to pay these bills on time. Timely paid bills and elimination of prior debts is the fastest way to recover your credit score and get your financial future rolling in the right direction.

Step 3: Avoid Missing / Late Payments

Now that you have laid out your plan for the next few months on the bills you will need to pay, make sure to follow those deadlines as strictly as you can. If you are struggling month to month, sit down and go over all of your expenses to see if there are aspects and charges you can eliminate to free up some financial wiggle room in the meantime.

Following these deadlines and dates will help you avoid taking any negative hits to your credit score in the future. When applying for a loan, your recent trends are very important in the approval process. Make sure that those trends reflect an upward move towards stable credibility.

Step 4: Give yourself time to rebuild you credit

One thing that most people don’t realize is that once an outstanding account is sent to collections, that record will show for up to seven years even when the balance has been taken care of. This is something to be knowledgeable of, but not afraid of.

Rebuilding your credit will take some time, but it is worth it. This should not discourage you from the rebuilding process, but encourage you. Like mentioned before, your recent credit history is very important to your credit score, so make sure it reflects the proper image.

When laying out your plan, it will also be beneficial to your month-to-month financial flexibility to have a long-term plan. Start by eliminating past debts and not missing upcoming payments, and once all of your bills are current, continue to trudge forward.

Step 5: Apply for new credit cards only as needed

One hole that people often dig themselves into when aiming to rebuild their credit score is opening multiple new credit accounts to try and build up and help pay off past debts. The more unnecessary accounts you have open to manage, the more likely you are to fall behind in payments, or get yourself into a situation where you can’t pay the cards off on a timely manner.

The last thing you want to do is make your current situation worse. This shouldn’t discourage you from opening a new card if that is the move that makes sense, but make sure that the account is justified, and that you have a plan to pay it off going forward.

Summary

These 5 tips are a great starting point to rebuilding your credit score and making your financial footprint a positive one. A bad credit score is in no way indicative of being a bad financial human being because sometimes certain situations arise.

Going forward, create a plan of execution to get back on track. Get current on all of the bills you owe, and create a timely plan on how you aim to pay your current and future bills, as well as to have some financial flexibility in your life. Try to eliminate the stress of your financial situation by balancing it with the happy aspects of your life, because at the end of the day, your credit score doesn’t determine your quality of life.

Rebuilding Your Credit for a Home Loan

Contact one of our lenders at VA Loan Spot today, as we are readily available to help you rebuild your credit score, as well as do everything in our power to get you approved! We know that things happen, and that is why we do our best to help everyone who comes to us and build a better financial future for all!

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Do you have more questions about the VA Home Loan Process, or are you ready to start the process?

Talk with a VALoanSpot Loan Specialist today at 800.537.2050, or fill out our Get A Quote form and a specialist will contact you shortly.

Bobby Atkisson

Bobby Atkisson

Bobby Atkisson is a seasoned mortgage professional who provides high quality financial services to military members and veterans. With over 14 years experience in the lending and financial industry, his mission is to provide high quality mortgage programs with the most competitive interest rates. For expert advice and guidance on VA Home Loans and Refinance, contact Bobby today at 800-537-2050.