How to rebuild your credit:
The first step you want to take when considering rebuilding your credit is to check your credit score. No, this will not harm you or make your situation worse. It is vital information that you need to be aware of. Your credit score is what all banks and lending institutions look at to determine your risk – or their risk on taking a chance on you, to put it simpler. Maybe in the past checking your credit score would “hurt” you, but if you are serious about rebuilding your credit you need to know this information.
The next step is to create a plan for yourself. There is nothing better than short-term and long-term goals. Make a list of the most important reasons you are rebuilding. It could be to purchase a car, purchase a home, education, or simply to get your ducks in a row. Maybe you are a little disorganized and this is a way to get yourself back on track. Whatever the reason WRITE IT DOWN! You then want to write out your short term goals. It can be saving $1000 in 6 months, paying off a credit card, closing a credit card, etc. Your short term goals are items you can accomplish within 1-2 years.
Now, write out your long-term goals. What is the main objective? Your long term goal is what you are looking to accomplish in 1-5 years. It can go as far out as 10 years.
Once you have your goals lined up it’s time to create an action plan. HOW are you going to reach these goals? Having the need to rebuild your credit doesn’t mean you have the determination.
Your action plan needs to be SMART:
- Specific - Goals should be simplistically written and clearly define what you are going to do
- Measureable - Goals should be measurable so that you have tangible evidence that you have accomplished the goal
- Attainable - Goals should be achievable. Your goals should be challenging but not unattainable. Do not set yourself up for failure
- Results-Driven – Goals should be results driven in that you can clearly see when you have completed said goal. Example: “Pay off Credit Card 1 in 8 months” – the result is either yes or no. Did you complete this goal on time, or not?
- Timely – Goals should be timely so you maintain a sense of urgency and do not lose focus. A long-term goal may have several short-term milestones
Now that you have your action plan, it’s time to begin. Do not wait for “Monday” or “Tomorrow”. Pick a start date and begin on time. Above all else, it is most important to be HONEST with yourself. Do not pick timeframes and goals that are unrealistic, unless you WANT to fail. You need to look in the mirror and tell the truth to yourself. Pretend you are talking to a stranger. Do you procrastinate? Do you spend beyond your means? Is your credit in shambles? Answer YES is the answer is YES! The worst thing you can do is lie to yourself when you are looking to CHANGE!
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