Easy Steps to Repairing Your Credit (cont.)
Contributed by Luey
Be conscientious: pay all of your bills on time
If you are trying to repair your credit score it can become very costly if you are constantly missing payment due dates. The first cost is the late charges that credit card companies apply. Take note that if your bill is due on the 15th of the month, it is good practice to make sure that the check is in the mail by the 10th. It is a common misconception that if the bill is post marked by the due that then you are in the clear. This is untrue.
Credit card companies charge anywhere between $25-$40 dollars for late or missed payments. The second cost of a late payment is harder to repair, this is the damage done to your credit score. The more recent a missed payment, the more heavily your score will be penalized.
Repair credit score by keeping a low balance-to-limit ratio
It may be tempting to close a credit card account as soon as you finish paying the balance. However in doing so you may be doing more harm than good to your credit score. Say for example you have 5 credit cards with a total of $10,000 credit available; you carry $2,000 credit card debt on one card. Therefore your balance-to-limit ratio is 2/10 or 20%. If you decide to close one of your cards that has a $5,000 balance, in the meantime continue to carry your $2,000 debt; your balance to limit ratio is now 2/5 or 40%.
By following the abovementioned steps you can be well on your way to an excellent credit score.
