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Best Ways to Rebuild Credit

Bad credit can happen to anyone. Medical bills, unexpected expenses, or job loss can result in unpaid bills or late payments, which can decrease your credit score. A low credit score will make borrowing money impossible or more expensive because of higher interest rates.  

The good news is that there are steps you can take to improve your credit score. Understanding the factors that determine your credit score can help you with rebuilding your credit. 

What Is a Credit Score? 

Your credit score is a measurement of your credit history, determining the risk of whether a debt will be repaid. FICO and VantageScore are two credit score ranges. Both are 300-850, with the higher scores being better. In the FICO range, 580-669 are fair, with below 580 being the poor scores. With the VantageScore rating, poor scores are 600 and below.  

Credit agencies determine these scores by considering a consumer’s credit history, debt-to-income ratio, and the percentage of available credit they have to use. Paying off your debts and paying your bills on time will improve your credit score.

Ways to Improve Your Credit 

While having bad credit can feel awful and can keep you from taking out necessary loans, consumers can improve their credit scores with the following tips. Credit repair won’t happen overnight, but taking this advice and building good credit habits with time will improve your credit score. Here are a few ways to take toward credit repair. 

Make Home Improvements 

If you’re wondering how to pay for a home addition if you have a less-than-perfect credit score, Homeowner Funding can help. As an NRIA authorized contractor, Homeowner Funding helps homeowners find special funding sources for needed home improvements. Best of all, you can make the repairs and renovations you need and rebuild your credit at the same time.

As you pay back your home improvement loan, made at a reasonable interest rate, you’ll see your credit score rise as you enjoy your beautiful home improvements, such as sunrooms, additions, windows, and more. You’ll create a more positive credit history as you pay off loans for a more beautiful home. 

Get a Secured Credit Card 

Secured credit cards can act as an emergency fund and be available for times when you need to use a credit card but don’t want to increase your consumer debt. Secured credit cards hold a deposit of your money, which you can draw from each time you use the card. Many credit card companies offer secured credit cards. 

Pay Each Bill on Time 

Make paying a bill on time a habit, and you’ll see your credit score improve. One way to remember to pay bills on time is to sign up for paperless billing. You’ll likely get a reminder email or text message that your payment due date is coming. Paying online is faster, easier, and, in most cases, free. Another plus to paying each bill on time is that you avoid late fees. 

Review Your Credit History 

If there are errors in your credit history, your credit score might be lower than it should be. Request free credit reports from Experian, Equifax, and TransUnion, the three major credit bureaus, and dispute any errors you find. 

Decrease Your Debt-to-Income Ratio 

Since the amount of debt you have compared to your income is a factor in calculating your credit score, you’ll want to decrease the amount of debt you carry, increase your income, or both. Paying down consumer debt with a high interest rate is always a good idea, and increasing your income by picking up a side hustle or part-time job can help you do that.  

Decrease the Percentage of Credit Used 

Another factor in determining your credit score is the percentage of available credit used. You’ll want to keep that percentage below 30%. To get there, pay your credit card bills and only use credit cards when necessary. 

Also, consider opening another credit card account to increase your amount of available credit, which would lower the percentage of credit used. Use that new credit card account sparingly, if at all.  

Get Financial Assistance from Homeowner Funding

Repairing your credit score won’t happen overnight, but if you commit to forming good habits such as paying your bills on time and rebuilding your credit history, including repaying any window funding loans or other home improvement loans, your credit score will rise with time.

Get the home improvements you need and start rebuilding your credit today. Call Homeowner Funding.

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Joe D.

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