Your credit score has a huge impact on your overall financial future, ultimately influencing your ability to take out loans, the interest rate you get on those loans, and your overall financial future. Unfortunately, many Americans have found that the financial mistakes of their youth follow them years or decades later. Thankfully, there are ways you can rebuild your credit. Here’s an overview of some of these methods.

Do The Prep Work

First and foremost, make sure you understand just what your credit score is and what is holding you back. Using any number of websites, sign up for a free credit report. This will give you access to your credit score and may give you limited options to see what debt you have. Compare that with your own records, and use all of this information to generate a spreadsheet that lays out what your debt is.

Automate Your Payments

One of the biggest problems when it comes to making payments on your credit cards and various debt is that it can be way, way too easy to forget what you owe and when you owe it. However, thanks to the internet, this is an easy problem to solve. Simply automate your payments. As long as you have a checking account, there is no reason you cannot automate your payments so that you always pay your bills. If you do this for all of your accounts, you will never have to worry about a late payment again. A regular history of on-time payments is absolutely critical to rebuilding a poor credit score.

Pick A Debt Reduction Method and Stick To It

One of the reasons many find themselves with a lower credit score is too much debt. Your overall debt load is a large piece of what makes up your credit score, and having too much debt can lower your score, raise your interest rates, and ultimately make it harder for you to take out additional loans in the future. As such, make paying off your debt one of your top financial priorities. There are many ways to pay off your debt, such as the Snowball or Avalanche method. Pick the one that works best for you, and stick to that plan. 

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Use Your Credit Cards…Appropriately

Think that not having a credit card can help your credit? Think again. You need a credit card to establish good credit because a regular history of on-time payments can boost your credit score. As such, don’t cancel your credit cards or fail to take them out entirely. Instead, treat your credit cards as if they are your checking account. Change your mindset so you never trick yourself into thinking that your credit card is simply free money, and make sure you pay off your entire balance every month. 

Check Out Loan Consolidation Options

Interest rates are at all-time lows, and that means it may be the perfect time to consolidate your loans. With loan consolidation, you can take a variety of loans and move them all to one provider, potentially lowering your interest rates, as well as your monthly payments. Loan consolidation may mean that you pay more money over the lifetime of the loan, but if you lower the interest rate and make steady payments, you can ultimately find yourself in a position where you pay off a loan quicker than anticipated. 

Increase Credit Limits

Every credit card has an upper limit on it, but if you have a strong enough credit history, you can increase the limit – even if you never intend on using it. So, how is that helpful? Well, a portion of your credit score is determined by your credit utilization rate. This is the amount of debt you have compared to your overall credit limit. As such, increasing your credit limit can decrease your credit utilization rate. This, in turn, can increase your credit score.

This is just a small sample of the things you can do to increase your credit score. Remember, paying your bills on time and being responsible with your finances is the best single thing you can do to not only repair your credit score but keep yourself from having credit issues in the first place.