The Basics of Credit Clean Up

Credit can be a fickle thing and if you don’t know much about credit, your credit report or score and how credit works it can seem overwhelming to try and find ways to fix or clean it up. As overwhelming as credit practices may seem there are ways to clean up your credit and plan for a better financial future with smarter spending and borrowing practices.

There are four main ways to clean up your credit and the more cohesively you use them together the better the result at the end. This article will briefly go through the four areas and how to take part in them. Through your research you are likely to come across more in-depth information that will play a part in working with the information provided here to give you the best results in cleaning up your credit.

The first way to start your journey toward better credit and a higher credit score if to work on a pay off or debt management plan. The more you ignore your debt, the worse it gets and the harder to fix. You need to first get all three of your current credit reports and lay them out in front of you. Take the time to use a highlighter and highlight all the accounts that are currently open and have a balance. Some of these are likely past due, while others may not be. To get a complete look at what you need to pay off, you need to highlight them all. This should NOT include monthly living expenses like utilities, rent or other accounts that may be listed on your credit report. This is only the debt you need to get out from under. The next step to forming a debt pay off plan to consider the highest balances or highest interest rates first since these are more harmful to your credit, though the smaller accounts may be easier to pay off. Remember, while you are paying off larger debts with larger payments, you must still maintain the minimum payments on monthly accounts and living expenses to keep from worsening your debt.

The next step in the credit clean up process should be to consider the good accounts you have and work hard to keep them in positive standing. These accounts will help to steady and improve your credit when you get the bad accounts paid off. When you have paid off the bad and past due accounts, you can consider adding a good or small account to keep in good standing, but don’t consider adding anything until you have dug yourself out of the hole you are currently in.

Next, you want to check over your credit report for errors. This can happen by accident or through the presence of identity theft. Either way you need to find it and dispute it. Each credit reporting agency has their own dispute policies and procedures and you will need to read through and follow them accordingly to dispute incorrect items on your credit report. Often times this information will print at the end of your credit report and should be readily available on the agency web sites as well.

The last and probably most important thing to consider when working to clean up your credit is to form and set up a plan for future financial success. You need to be able to handle money in a smart way and avoid getting back into the same situation or having to work so hard again. To do this you need to learn to live within your means and learn the difference between need and want. This can be especially hard if you’ve become accustom to a certain standard of living or have friends with a higher standard of living than you can afford. You need to be honest with your self and with others about the life you can currently have, this will help you be about to reach the life you want in the future.

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