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Good credit can have a tremendous effect on your quality of life. Even if you don’t see yourself buying a home or car soon, it has an effect on many things. Auto insurance companies run checks before issuing policies, property management companies require a minimum score for renters, and many employers check the score of job candidates before extending an offer. Regardless of where you stand now, you can improve. If you have never had a credit card, if your credit is poor, or you have debt, there are solutions. Problems won’t disappear overnight, but as long as you are diligent, you can improve your score.

Dealing with Existing Debt

A common problem is going into debt, maxing out your card and making only the minimum payment. You may start with the best of intentions, paying your card off in full each month. Over time, problems crop up. You begin to charge routine expenses like groceries, or maybe you had an unexpected auto repair bill to cover. Once you begin carrying a balance, it is easy for your debt to snowball. You pay a significant amount each month in interest, so making the minimum payments barely put a dent in your balance. Maybe you throw a little extra into each payment, but then end up using the card again. This cycle is hard to get out of. If you keep managing your finances this way, your luck will eventually run out.

Something may happen and you can’t manage the minimum payment. You make the payment late, and the next month a late fee is tacked on to what you owe. At the very least, carrying a high balance has a negative impact on your score by increasing your utilization. Credit utilization has a significant impact on your score. Late payments and high utilization are the two things that can pull a score down even if you never miss a payment. Both tend to scare lenders, who may then begin the process of balance chasing, or lowering your limit after you make payment. They do this to reduce their risk, but it keeps your utilization high.

If the debt is weighing you down, consider taking out a personal loan to pay off your cards. Taking out a personal loan has never been easier. You can complete the process online, and get matched with the best loan for your circumstances in less than 60 seconds. Using a personal loan to pay off your debt will be a huge stress relief. Instead of juggling multiple payments each month and never feeling like you are making any progress, you will see those zero balances. Your loan, with more favorable terms, requires one payment a month and you know exactly when you will have it paid off.

Once you pay off your cards, put them away. While you are still getting control of your finances, using them will create too many temptations. Even if you promise yourself you are only doing it to accumulate reward dollars or points and will pay in full each month, the odds are you will fall back into your bad habits. Don’t close the accounts. A closed account, even when paid in full and in good standing, can drop your score. The only reason to close the account at this point is if you do not think you can resist the temptation to spend. Otherwise, stick them in a drawer and forget about them.

Building Credit

You don’t have to have bad credit to struggle with it. Having none can be just as troublesome when you are looking to rent a home or buy a car. Credit takes time to build, so it makes sense to start the process before it becomes an emergency. If you don’t have a history, a secured card is the logical first step. You give the bank a deposit that acts as collateral. After you build a history of responsible use, they will graduate the card and return your deposit.

Some cards require a deposit in the amount of your spending limit, while others only require a percentage of the limit. Spending responsibly is the best thing you can do to build a solid history. Pay your balance in full, every month. Keep your utilization low. Cards with low limits, which most have for first-time holders, can put you in the position of having high utilization if you use it frequently. Making payments throughout the month allows you to keep an eye on your utilization, keeping it below thirty percent or so of your limit.

Repairing Damage

Repairing your credit takes longer than establishing it. How long exactly depends on exactly what is causing the issue. If you have some late payments of 30 or 60 days, be diligent about making your payments on time going forward. Set a reminder on your phone or set up auto-pay for the bill. There is no way to remove the late payments from your report, but each month that passes makes them less important. If you have collections on your report, the situation is different. The best possible scenario is to pay the amount you owe with the agreement that the company will remove the entry from your report. This is not always possible. You may not have the money, or the company may not agree to delete even if you do pay.

After a certain period, the negative marks will drop off your report. In most places, seven years is the point where negative marks drop off the report, but the law in some states treat debt differently. If you are nearing the point where the negative mark would drop off, you may just want to be patient. However, until the negative marks ages off your report, the company may still try to collect in court. For anyone who is considering homeownership, paying off collection accounts should be a priority. Even if your score, history, and finances qualify you for a mortgage, most lenders will not approve anyone with an open collections account in their history.