If you’ve ever had a bad credit score, you know that it often involves a cruel cycle of debt, missed payments and collections. It can be hard to break out of this cycle, mostly because that requires perseverance – nothing is going to get better overnight. You’re in it for the long haul.
So how do you go about breaking out the bad credit cycle? Here are 4 steps that will give you a pretty good chance of building good credit, and making sure things stay that way.
Step 1: Set up automated bill payments
It can be hard to remember when bills are due, and even one missed payment can erase months of progress repairing your credit. The easiest, and most stress-free method of avoiding late payments is to set up automated bill pay whenever possible. Virtually every credit card company allows this, and it’s also an option for other bills such as utility payments and cell phone bills.
Once you set up your automatic bill pay, you no longer have to worry about making a payment on time (although you still need to make sure there’s enough cash in your bank account).
Step 2: Pay off your entire credit card balance each month
Pay off your credit card balance (down to zero) each and every month to avoid falling back into a cycle of debt. Not only does this ensure you don’t build up credit card debt that take years to pay down, it also makes it so you pay zero dollars in interest. Win-win.
Step 3: Don’t use your credit card unless you have the cash to back it up
Every time you reach for your credit card, ask yourself this question: “is there enough cash in my bank to cover this?” If the answer is No, seriously re-evaluate whether you need to make the purchase after all. Emergencies happen, but most of the time you’ll find that you can do without the extra purchase – and you’ll avoid falling back into the bad credit cycle.
Step 4: Try DIY credit repair to fix errors in your credit report
More often than you’d think, problems with your credit score stem from errors in your credit report. Thankfully, there are steps you can take to remove errors from your report, and you can do it all without having to hire a professional. Visit our credit repair tips and tricks page to learn more about DIY credit repair.
Or course, if you don’t have the time or motivation to tackle credit repair on your own, you can always see what the pros have to offer by getting a free credit consultation.
photo credit: ALL JAPAN CYCLO-CROSS CHAMPIONSHIP 2009 via photopin (license)
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