If you have gone through debt settlement, there’s probably a question that is eating away at you: How do you rebuild credit after debt settlement?
First of all, congratulations on taking the time and working with a professional to settle your debts. Too many people waste years, allowing more and more debt to accumulate without doing anything about it.
Second of all, please understand that your suffering credit score took some time to get to the state it’s currently in. It will take some time to build your credit back up again. But by doing a few simple steps, you will be well on your way to good (even great!) credit in no time.
Pay Your Bills On Time
One of the best things you can do is keep your current bills paid on time. For at least a year, be sure that you pay at least the minimum balances on all of your bills by the time they are due. As much as 35% of your credit score is determined by whether or not you’re paying your bills on time every month. Establishing a continuous positive pattern will definitely work in your favor.
Pay Down Your Balances
Many individuals aren’t aware of this, but when your balance for a credit card, loan or other line of credit falls below 30% of the amount that is due, your credit score jumps up. So, it really is worth it for you to pay a little more than your minimum payments each month if you can.
Responsibly Use Credit
In order to build credit, you must use credit. But, you need to remember to use it responsibly. Only use it for purchases that you know you can pay off quickly. Some people want to steer away from using credit at all costs. However, if there is no credit activity for you whatsoever, your credit score will continue to be based on your past behavior instead of your current state of financial responsibility.
So while you’re pining away for that new home you want to purchase or that amazing new car you can’t wait to drive, remember that you will get there with a little determination, sacrifice, and willpower. While it takes time to rebuild your credit, you will do it. You have the right tools in place, and your credit score can only go up from here.