People ask me all the time, “Brian, how can I fix my credit? I got in some financial trouble a few years ago and I just can’t figure out how to get my credit cleaned up and my FICO Scores back on track”.
Let me tell you, there are plenty of good people who have gone through credit challenges in the past few years. AND there are plenty of people who are just plain bad at managing money. I don’t know if I can help them, but I will try.
- First, stop spending money you don’t have. Unless it’s a dire emergency, and I am not talking about a great pair of shoes that you just have to own, don’t use your credit cards.
- Now, I know this one will run counter intuitive to what some money managers will tell you, but here goes. Pay the card with the lowest balance off FIRST!. It will give you a feeling of accomplishment when you have one less monkey on your back and that will help you keep going.
- Put a chunk of extra money each month on your car loan, your student loans and your mortgage. You will be surprised how that adds up over time.
- When you HAVE a little extra money, invest it with a good financial advisor. The bank it’s going to give you a very small return, but when you invest, your money can grow. When you have some extra money, then during emergencies you can use some of it instead of piling on credit card debt.
- Make your own coffee, or better yet, if you have to buy coffee when you’re out, McDonald’s make a decent cup of special coffees for far less than the fancy places.
- Once you have paid most of your cards off, ask to have your credit limit increased. FICO scores are calculated on the ratio of credit used to available credit.
- Apply for one new card and use it carefully. Charge something small, then pay it off over a couple of months. Do this every few months.
When you get a raise, figure out what you net after taxes and put half of that money away. I have been working in the Mortgage business for a while now and I know for a fact that if you do at least MOST of what I talked about here, your credit will look better in a matter of a few months. If you keep it up, I bet you will sleep a little better at night too.
For help with this and anything else to do with purchasing or investing in a home. Give me a call, I really am happy to help.
Your mortgage guy