How to Rebuild Credit

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Credit's one of those things we tend to ignore until our mid-20s, and sometimes we accidentally trash it with less than optimal choices. My own personal blunder was getting an electronics store credit card for a single purchase only to cancel it immediately after. And my credit took a hit. Whoops. Not a very compelling story, I know, but that's what happens when you're a tad too straight-laced (still working up the courage to ride my first roller coaster.) 
 
But for those who were a bit more adventurous than me, rebuilding credit can be a real drag. Especially if you're looking to buy a car (wink--wink) or get set-up with your first mortgage. As far as the most effective ways to fix bad credit, here are a few immediate actions you can take to get yourself back up to those sweet, sweet 700 scores.
 
Get Your Credit Report
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Step one to better credit is knowing where you currently stand. Turns out all those "free credit score" commercials weren't just blowing smoke.
 
There are a number of sites that you can use to access your score, one of the most well-known being Credit Karma. Don't worry, I've used it myself, and it really is free (and I don't a sharpened pencil to my head as I type this.) 
 
Once you have your score, you'll want to do a thorough check of the reports to make sure there aren't any errors such as, incorrect late payments or mysterious credit cards being opened. If there are, you will want to get in contact with the FTC (Federal Trade Commission) and make a dispute to have it removed.
 
Once you've verified everything, we can move to the next step.
 
Make All of Your Payments On-Time
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While this can be easier said than done, on-time payments are a surefire way to recover a credit score. If you have to, set calendar reminders on your phone to know when you need to pay certain bills and mold your budget around ensuring you have money available to pay it. Many companies also offer an automatic payment, meaning the bill will be automatically pulled from your bank account each month.
 
This step definitely requires the most math, but showing the bank that you can make reliable and consistent payments will help your credit recover.
 
Go Above the Minimum Payment
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Banks tend to frown on minimum payments for things like loans or credit cards, and it can affect your score. If you are able, pay at least a little more above the minimum requirement to help give your score a boost. 
 
Avoid Opening or Closing too Many Accounts
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This is especially true if you don't have a long credit history, and it can be a red flag for banks when they see someone constantly opening or closing accounts. Pick one or two credit cards and stick with them. If you do need to close or open one, make sure they are spread out over time or until you've built sufficient credit history.
 
Spread the Debt
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Instead of pouring all of your money into paying off one of three credit cards, you want to spread that money over all three, paying them down together. Higher balances can hurt your score more, even if you have fewer cards.
 
Talk to Your Creditors
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Truth is, creditors want us to be debt free as much as we do (at least until we have good credit again...but hopefully we'll be wiser the next time around,) and many are willing to work with you to help you manage your payments and get you caught up. It never hurts to give them a call and try to work out a payment plan that makes both parties happy. 
 
Good Credit Takes Time
In this world of instant gratification, credit is not part of it. It really comes down to patience and discipline. 
 
On that note, I wish you the best of luck in your quest for that awesome score you deserve!
 
Written by Tyler Wright
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