Your DIY Credit Repair Guide (Part 2)

In our last article, we discussed the first three steps to repair bad credit.  After checking your personal credit report; cleaning it up and freeing it from errors; and negotiating with your creditors; what else can you do?

Keep old accounts active.

road out of debtSome people may try to cancel some credit cards right away in an effort to reduce the number of accounts they are managing.  However, there is a danger in closing accounts carelessly.  If you close out your oldest accounts, it would also mean deleting the oldest parts of your credit history which could cause your credit score to drop even more.  Hence, before calling up your bank to request for cancellation, you should carefully consider your options.

At this point, it’s best to keep your old accounts active.  If you must use a credit card to keep it from automatically closing, use it only for a small purchase and pay it off right away to avoid revolving balances.  Another important thing to remember is that you should never close an account with an existing balance.  Make sure that you have paid all your charges.  Last but not least, you should specifically ask your creditor to report that you volunteered to close the account.

Ensure that your payments are reported.

It’s important to make sure that your creditors are promptly reporting your payments to the three major credit bureaus.  This is a step that you should not overlook because it can have a huge impact in your credit score.  Remember that not all creditors provide credit reporting service so the next time you open an account, see to it that your chosen creditor does offer this essential provision.

Control your credit card use.

Some people got into bad credit as a result of uncontrolled credit card spending.  Although many are aware that overspending can easily lead to bad credit, many cardholders are guilty about this negative habit simply because charging purchases to a credit card is convenient.  You don’t really feel the burden of repayment until your credit card bills start to pile up.

Hence, you should never use your credit card for an unplanned purchase.  If you want to use your credit card, make a list of the items that you plan to charge to your credit.  How much do you plan to charge to your credit card?  Can you afford to pay it on time?  More importantly, can you afford to make full payment?

Frequently carrying a balance on your credit accounts can be very risky.  Not only will you need to pay the interest rate charge, you are also increasing the possibility of debt build-up.  As you submit only the monthly minimum payment, you are more likely to charge new expenses to your account again, adding up to your debts.  Before you know it, you are stuck in bad debt.

PART 1. Your DIY Credit Repair Guide

About the Author

Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 24+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

2 Comments
  1. Following these steps people with bad credit are sure to succeed. I would like to add while paying down your credit card debts one option that may help you get ahead is to take advantage of credit card transfers. Normally banks will let you transfer your balance (they’re more than happy to take it) for a small fee. Thanks

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NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

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