Numerous consumers are concerned about increasing their bad credit score after they have paid off various debts which may have contributed to a drop in their credit due to either missed payments or financial troubles which have arisen as a result of unemployment, poor financial practices, or simply spending beyond one’s means to repay, but there are some mistakes that consumers have made that have not only lead to a more difficult road when it comes to repairing a bad credit score, but it could also cause consumers to actually take a step in the wrong direction in terms of acquiring a better credit score.
Items on a credit score that are a bad mark will usually remain on a consumer’s credit history for around seven years, if for example, a consumer has missed payments on a particular debt and become delinquent. While a consumer cannot get these items removed from their credit history, individuals can take the proactive step of looking at their credit report to make sure that items listed, be they good credit or bad credit items, are accurate to their financial life. Once this has been established, consumers are now in a position to begin the process of simply building a better credit history and, as a result, increasing their credit score.
Yet, consumers who have seen their credit score drop due to various missed payments or defaults, may be able to either find themselves in a position where they have gotten on track and erased these debts or some consumers may have simply consolidated these debts and, as a result, have found themselves in the advantageous predicament where they can begin the credit repair process. However, after paying off certain forms of debt, like credit cards, some consumers have made the mistake of closing out these accounts which will lower their credit utilization ratio, meaning they may have more debt in their life in relation to the amount of available credit.
Consumers who pay off a credit card are usually advised to keep this account open and only use this card sparingly throughout the year to make affordable purchases which can be promptly paid off, and if spending too much on a particular card is a problem, simply keeping this card out of sight and filed away where it cannot be easily grabbed on the way out the door, could help cut down on casual spending where many consumers simply hand over their credit card while out shopping.
When a consumer checks their credit history, though, to make sure there have been no fraudulent items or mistakes associated with their particular credit score, have erased debts that may have been problematic and the source of their poor credit score, and are now in a financial position to begin the credit repair process, proper use of credit will be vital so as to avoid further bad credit situations and problematic debt. Many consumers in this position will simply budget in such a way that will allow them to purchase items or services on a credit card and, again, simply make sure they have saved enough money so that they can pay off the entirety of this balance each month. If multiple cards are in place, advisers have often counseled consumers to, again, focus on using the oldest card as it will have the longest credit history, but also sparingly and responsibly use other cards throughout the year so that card activity and repayment practices will begin to build a more positive history for the consumer and eventually lead to a higher credit score as these proper financial practices are implemented.