If you've ever made a mistake that damaged your credit, you're not alone. 68 percent of Americans damage their credit before turning 30.
The good news is, your score can be repaired and you can bounce back from past credit mistakes.
Understanding how your credit score is calculated is the first line of defense against damaging your credit. There is a simple calculate that makes up your credit score, but not all categories are created equally.
1) Always, always, always pay your bills on time. Your payment history accounts for 35 percent of your score. You can't fix past mistakes, but you can move forward with this new knowledge. If you're not current on your bill payments, get current and try to stay current. Nothing will affect your credit score faster than a missed bill payment. Make paying your bills on time your # 1 priority. Once your good payment history starting recording on your credit report, you'll start seeing your credit score rise.
2) Limit your spending on credit cards. Credit utilization, or how much credit you're using minus how much you have available it vitally important. It accounts for over 30 percent of your overall credit score, and if you're using more than 30 percent of your available credit, you're hurting your score. Your next priority should be to get all credit card accounts to 30 percent (at the very least – we'd advise to never carry a balance). Don't think this is a big deal? My credit utilization was at 32 percent one month because I had an unexpected car repair, my score dropped a staggering 32 points because I was 2 percent over the recommended limit.
3) Utilize a credit repair company to get incorrect, misleading or outdated information off your credit report. Over 40 million people had material errors on their credit reports, you could be one of them. If you haven't checked your credit report lately, I suggest reviewing it to ensure accuracy. If there is information on your credit report that isn't correct, or outdated or totally misleading a reputable credit repair agency can help you get it removed.
Everyone makes credit mistakes, but thankfully there are ways to fix your past mistakes and move forward. By employing the three strategies above, you may see an improvement in your score and in your life! You'll see lower insurance rate and interest rates, that will ultimately put more money back in your pocket.