Repairing bad credit requires paying down debt, making payments before deadlines, using a smaller portion of available credit and not closing credit cards after paying them off, as Clark Howard reports. Applying these strategies helps consumers with bad credit restore their credit history.
Bad credit may be changed with simple changes to credit use, as Clark Howard suggests. Paying down total credit card debt and loans reduces the total amount of personal debt and restores the abililty to borrow. Carrying smaller debt balances reduces the proportion of available debt in use, which is a factor considered when a company evaluates your credit history. Keeping credit cards open after paying them off maintains the full amount of available credit that lenders are willing to offer and raises credit scores by reducing the percentage of credit used.
Credit repair companies may offer to help restore credit but are not as effective as changing credit habits, as Clark Howard claims. These businesses may temporarily improve credit scores, use fraudulent practices or manipulate scores without providing lasting improvements for borrowers. Credit repair agencies appeal to consumers seeking quick results, but lenders are increasingly aware of their methods and credit repair tricks are less effective as a result.