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Steps to rebuilding bad credit | Eyewitness Wants to Know

The pandemic was a financial fiasco for some of us, forcing many to turn to credit. How to rebuild your credit score after maxing out cards and missing payments.

TEXAS, USA — The pandemic had a drastic effect on finances. Many experienced job loss, price increases and healthcare costs. Fickle finances meant blown budgets. Many us had no choice but to put essentials on a credit card. Repairing your credit score can be quicker process than you think.

“As soon as you make a plan and just start from square one, you can start making improvements,” said Nathan Grant, a senior credit industry analyst at Credit Card Insider.

Step one: Check your credit report. Find out your score. You need to know where your score is at so you can get it to where you want it to be. Double check you are not a victim of identity theft.

“During the pandemic fraudsters were out there taking advantage of people’s fears and concerns,” said Rod Griffin, the senior director of consumer education and advocacy for Experian. “So check that report.”

You can get your report for free weekly at AnnualCreditReport.com.

Step two:  Begin to make on-time payments.

“Failing to make payments is the biggest mistake that people make because that shows they’re not fulfilling your obligations under the contract and is a huge indicator of risk to lenders,” Griffin said. “So, your scores will drop dramatically.”

A late payment can stay on your credit report for seven years from the date of the missed payment.

“If you missed one payment, talk to your lender,” Griffin said. “They may tell you that they will take it off the report or just won’t report it and you can recover quickly.”

Step three:  Find tools to show positive payments to raise your credit score. Experian offers Experian Boost for free.

“Experian Boost will let you add your positive cell phone payments, your positive utility payments, your positive streaming service payments like Netflix to your credit report, which wasn’t possible in the past,” Griffin said. “We add them as accounts to your credit report to show that positive behavior. What we’re seeing is that on average, people’s scores increase about 12 points for two out of three people. If a person has had some issues, we’re actually seeing increases of closer to 19 points.”

You can also open a secured credit card.

“You will actually make a security deposit that funds the credit limit for the card,” said Grant. “Let’s say as an example, it was like a $1000 credit limit. You would be paying that deposit. Even though you were the one who funded the deposit, it still reports all the payment activity to the credit bureaus, just like a normal credit card. You get that deposit back at the end.”

Or get a store credit card.

“They’re a little bit easier to apply for, but a lot of times people are making these regular purchases every month anyway,” said Grant.

Store cards have higher interest rates, so be sure to pay off the balance monthly.

Also, check out the best credit cards for those with bad credit.

Paying bills on time and paying off past debt will quickly start to bring your credit score up.

If you have a question for eyewitness wants to know, email us at EWTK@KENS5.com or call us as 210-377-8647.

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