Start to Fix Your Credit Now, Fast!

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Virtually all of us in the entire world have one thing in common:

“We all depend on, and live for money”

You can try to tell yourself sweet lies about this truth, and that’s perfectly okay.

Out of the 120 hours that comprise the work week (Monday to Friday), you spend 40 of them working for money (that is, if you don’t work overtime, and don’t bring work home), another 10 hours commuting to and from work (assuming a 1-hour commute each way) and another 40 hours sleeping so that you can be well rested for work (assuming you sleep 8 hours a night, just like your doctor told you to).

So, that’s 90 of 120 hours spent, directly and indirectly, on work, which you do for money. Makes the notion of life sound pretty sad, doesn’t it?

As you have probably come to hesitantly realize by now:

“Money is Our Master.”

The great thing about money is that it is subject to a set of rules. This means that, if you were to learn and master these rules, you can reverse the roles, and Money can become your Servant.

The only way to get out of this insanity is to build up a decent base of Passive Income, not Residual Income. Learn more about income types here, Types of Income PROPERLY Defined: Passive Income Redefined.

You Do Not Need to be an Entrepreneur or Businessperson to Escape the Rat Race

Before you recoil into your usual, defeated posture thinking that you need to be an entrepreneur or businessperson to escape the Rat Race, think again. And, while I do espouse most of these concepts and principles, I am not part of the movement that believes frugality and savings can get you there. You can (and should) use your job to build the greatest kind of business by far. Take it from me, an actual entrepreneur. Read, Your Mortgage is a Poverty Trap, to get a sense of what I mean.

Long story short: Credit makes it MUCH easier for you to master your money. Credit allows you to grow. To quote the wisdom-filled adage,

“Whatever is Not Growing is Dying.”

In ancient times up to the agrarian age, the best example of, what today would be leverage, was the procreation of livestock you owned. You could own five animals and multiply them into 50 within a matter of years; thus leveraging the five you own today into 50 you will own tomorrow. Today, the only equivalent you and I have, being in the city in the 21^st century, is making use of credit in a similar way. Without credit, it’s much harder to grow, and even then, your growth will be slow.

So, to grow your money in the most efficient way, you need good credit. Read more about Why You Need Good Credit by clicking here.

Let’s learn how to fix your credit!

Subscribe to View Your Credit Report Daily

Credit Bureaus sometimes make daily access to personal credit reports available to consumers at a fee, usually sold as an annual subscription. It is a good idea to buy a subscription as these will allow you to track your credit report and how it changes as you make changes to your credit habits.

This being said, this is not going to look 100% the same on your report as it will to your potential lender. These bureaus tend to sell different packages to the lenders than they do to consumers.

They will, however, change on both reports as you make your changes, so it is definitely worth your while to do this.

Pay Off Your Debt                                                            

This is the most obvious sounding step, and also the step that will probably have the biggest impact on repairing your credit. The reason not many people take advantage of this basic (not easy) step is because of the subtle notion nuanced in society these days: “It is impossible to live without debt.”

To make this even wider spread, the bureaus force you to get debt so that they can acknowledge you, introducing you, ever so cunningly, into the debt trap. Hence. The single most important step you need to take is to teach yourself to live without debt.

Also on this point, it should be said there is something you can learn about your own finances by giving more pensive consideration to exactly how the lenders perceive you (it is a fallacy that the bureaus can see how much you earn, your expenses, your net worth etc. Only the lenders do, when they run an affordability test on you. This they will then use to determine what the maximum credit facility they are willing to offer you would be. This would be what the bureaus will be able to pick up).

If lenders think you are overexposed, it may not be a bad idea to just reduce your debt exposure. They are big lenders after all, and you are one of their many clients. If they think you are overexposed, it is because some of their other clients with similar means to yours, are less exposed to debt than you are.

Take it as a free opportunity to see how you compare with your peers.

Sounds basic and straightforward, but too many people let this simple step elude them.

Get a Credit Card

If you don’t already have a credit card it may be a good idea to get one. Listen to my words though:

                GET a credit card, not LIVE OFF a credit card

If you already have one, get another, or apply this advice to your current credit card.

In many ways on your Getting Great Credit Journey, having a credit facility is sometimes more important than using a credit facility.

Your use of this credit card must be for items that you can afford to buy cash. You need to put on your credit card, purchases that you can cover in cash at the moment that you make them. Depending on the level of self-mastery that you have attained, your next step can vary.

If you don’t have good self-control and resilience, make the purchase on your credit card and pay off the credit immediately. If you have a little more self-control, make the purchase on your credit card and earmark the funds you have for the repayment of this credit card activity to be repaid, and spread your repayments over a period of time; keep the earmarked money in a separate savings account at a different bank to be certain. Never spend on a credit card money that you don’t have.

While it is true that the bureaus like to see consistency, they will not penalize you for settling debts quickly. Trust me, I have tried this for myself.

Check Your Credit Limits

As explained in, This is How They Calculate Your Credit Score, the credit bureaus love to check how you interact with your credit relative to your credit limit.

If you have used over 30% of your credit limit, pay that facility down to at least 30% of your credit limit and never exceed that threshold again.

Work hard to get all of your debts below 30% of your credit threshold and keep them there.

Always accept an offer made to you to increase your credit limit. If you have been managing your credit well, but no such offer has been extended to you, request a credit increase. The credit bureaus view this as lenders trusting you and this increases your scoring.

Build New Payment Data

The credit bureaus prioritize your most recent data. With every passing month, you have the opportunity to create fresh, more flattering data of your credit and how you interact with it. Your previous data also starts to lose its weighting with each month, making for a credit report that is quite fluid.

Now that you are no longer subject to your credit, but it subject to you, paint them the picture that they need to see to give you a good rating.

Remember that no credit history can be as dangerous as bad credit history.

Play the game, but as a master, not one mastered.

Size Doesn’t Matter

Maybe, in other facets of life, size may matter, and with good reason, but not so with your credit.

The credit bureau monitors your interaction with small debts just as diligently as they do with your larger debts. Don’t neglect your small debt commitments because they can drag your credit score downwards just as easily as the larger ones can.

Conversely, don’t feel as though a tiny credit facility can’t get you anywhere with building credit; this couldn’t be further from the truth.

Installment Payments in Your Credit Mix

Many credit pundits promote installments payments as a necessary part of your debt mix. I disagree.

As these, in your mind may be unavoidable (you can do without them), I must speak to these kinds lines of credit (personal loans, vehicle purchases and mortgages) to cater to everybody who reads this.

While this may not always be the most financially savvy thing to do, as illustrated in, Why You Need Good Credit, it is in the best interests of your credit scoring to make extra payments on this type of debt.

As also illustrated in, Why You Need Good Credit, prioritizing the expedient boosting of your credit score over everything else is your most financially savvy move

I will repeat, for good measure:

“You can have good credit without having this type of non-income generating debt!”

Fix Errors on Your Report

While it has been reported that many people (measured in tens of millions) have errors on their reports, going about correcting them may be a mammoth task.

You need to assess whether it may be worth your while to get them corrected by getting an understanding of just how much they are affecting your overall credit score. By all means, if you can, correct every single error on your report, but manage your expectations beforehand on the effect that a successful correction will have on your credit report.

Understand That You Are the Only One on Your Team

The banks do not want you to have Excellent credit because you are generally less profitable to them that way. Debt counselors make money from your debt being in a state of disrepair.

Follow these steps and you will succeed:

• Learn the rules of the credit game for yourself.
• Stay out of debt.
• Master yourself.

All three of these steps rest squarely on your shoulders. Do not try to make them anybody else’s responsibility.

Finally: Master Yourself

Assets should make you money in real time (income – expenses, should yield a positive number). Stop buying liabilities and calling them assets just because that is how your middle-class teachers and lecturers taught you to position them on your balance sheet.

For EVERY debt that appears on your credit profile that is not making you money, you should have the cash equivalent of its value in a separate savings account; in other words, you should at any time be able to pay off your non-income-generating debt.

Your credit report should be more a painting that you paint for the credit bureaus (and thus lenders) than a reflection of your debt exposure.

Check Out My Financial Freedom Series:

Here’s a quick overview of the series:

• 1: What Financial Freedom is NOT
• 2: Financial Freedom & Your Time
• 3: Financial Freedom & Your Money
• 4: Financial Freedom & Opportunity
• 5: Why Your Financial Advisor Can’t Help You Achieve Financial Freedom
• 6: The Importance of Credit on Your Path to Financial Freedom
• 7: Financial Freedom & Your Career