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Credit Repair Lessons Learnt After a Troubled Financial Past

Here’s a story you may have heard before. I spoke to a friend of my mother’s, and this is a story that she had to share with us all.

I am 50. I earn $800 a month, and I have no savings. While this is my current financial situation, things have always been good for me in the past when I used to earn over $50,000 annually from my hospitality business. However, things changed when I ventured into a business that collapsed and left me with huge loans and unpaid bills. This has since hurt my credit score, despite having repaid a huge chunk of what was owed to me by my creditors.

I approached banks and credit score repair experts to help improve my credit rating, and this move has been of great help. I believe I will soon be able to access loans and credit cards at better terms. Besides the harsh realities, I also got a chance to learn in the process. And here are some of the lessons I learned that could help anyone struggling with credit scores in the “fair” and “bad” areas.

Make Frequent Payments

This is one of the most important pieces of advice given to me. By making small payments spread throughout the month, I was able to keep my balances down. This had a profound impact on my credit score. I later realized that making regular payments impact a key metric used in credit score calculation known as “credit calculation.” Keeping my utilization score was an invaluable lesson, which I also intend to carry on when I return to my former self.

Work With High Credit Limits

Another key takeaway from my engagements with financial experts was the need to have higher credit limits. However, this was not meant to encourage me to use my credit card every time I was in need. I only increased my limit, and, at the same time, ensured that my balance remained constant. Again, this has the effect of lowering the overall credit utilization, which takes away a few points from the credit score.

Become an Authorized User

Another important lesson learned is the impact of being added to someone’s credit card. And this should be someone with a long record of responsible credit card use and a high credit limit. During my initial engagements with financial experts, they encouraged me to use my rich contact lists and find a couple of people who could add me to their card as an authorized user. I didn’t have to use a credit card. After all, they did not share their account details with me, and the impact on my credit score was significant.

Use Secured Credit Cards

Secured credit cards have also been instrumental in my credit repair journey. When I was in financial despair, the last thing I wished for was anything that could further hurt my credit score, considering I understood the opportunities that come with having a healthy credit score. So I turned to secured credit cards, which require upfront payments before use. This also improved my credit score. I also realized that some secured cards do not report to all credit bureaus, so I had to settle on an option that reported my activity to all relevant credit bureaus.

Mix Things Up

I have always been using loans and credit cards, but I only understood the impact of mixing them up. Paying all bills on time boosts perceived creditworthiness and credit scores. While this move cost me some money, it also enhanced the effectiveness of my efforts.

Looking at all the efforts that I have put in in the past to repair my credit score, I now understand the role of credit repair experts in financial restoration.