Cleanup Credit, Rebuilding Credit Accounts, and Your Score

In order to take the necessary steps to cleanup credit and begin rebuilding your credit history, you must start with a plan. Rebuilding a negative credit history is not easy but it is simple. All you have to do is turn on a TV or look on the Internet to see there is an obvious credit crisis in this country. And with every crisis comes the armies of people and companies who want to help you rebuild and cleanup credit. You can clean up your own mess. You don't need to pay one of those fly-by-night companies to do ti for you.

Cleanup Credit by Admitting That You Have a Problem

Look, nobody wants to admit they have a problem, right? Yeah, we're all perfect, you know. The hardest part of all of this process is admitting to yourself that you may have a problem with using credit or spending too much money. How do you know you have a problem? One sure sign is that you're having difficulty making even the minimum credit payment each month on your credit cards. Another sign is that you have more bills at the end of the month than money, or that you have too many credit accounts. If this sounds like you, then it's time to make some changes.

Stop Credit Spending, Start Saving Money Every Month

It's time to make some new habits, and get rid of one, big, nasty habit. You must commit to stop spending any more money on anything except essential items - and never use a credit card again, at least until you have them all paid off. For the next month, keep a precise, detailed record of everything you spend money on. When you look at how quickly even the smallest expenditures quickly add up, you will be surprised. Look for ways to save money like making coffee at home instead of spending 4 or five dollars on a fancy coffee every morning. Eat out less and take a lunch to work.

Pay Off Credit Cards to Cleanup Credit

It seems like a stupid-simple thing to say it, but this is really at the core of getting back to financial health. You will start seeing some of the vast amounts of cash you'll be saving from watching every penny. Now, you can divert that money to making credit payments to some of those many credit accounts. If you really want to clean up credit and rebuild your credit score, this one thing is probably going to be the most helpful.

Here's how it's done. Get a pencil and paper, sit down and make a list of all credit cards and credit accounts. Be sure to write down the total balance along with he minimum monthly credit payment. Begin by paying the minimum monthly credit payment on each card, starting with the card carrying the lowest balance. Make all credit payments on time each month. When the lowest balance card is paid off, take the money you were paying on that first card and add it to the second card's monthly credit payment. When the second card is paid off, add the payment amounts for the first 2 cards and add that amount to the monthly payment on the third credit card. Before long, all cards will be paid off and you will have spent the same amount of money each month.

Final Steps to Cleanup Credit and Rebuild Your Score

As a last step, get a copy of your credit report and look for any errors, wrong information, or unverifiable items that may be there, Most people have one or more of these on their credit report. Federal law mandates that after September 1, 2010, every U.S. consumer can get one free credit report. For your free credit report, simply go to www.AnnualCreditReport.com for more details. An accurate credit report is a tool to help you cleanup credit and rebuild your score.

Above all, try to keep in mind that the cleanup credit process is going to take some time. Your score will not change magically overnight. This process will also require focused effort on your part. Pay off all credit accounts as quickly as possible, make all credit payments on schedule, get all that negative and unverifiable information of your credit report, and check to make sure you don't have any old, forgotten credit accounts for which you need to make credit payments. Also, try to re-establish new credit by opening new credit accounts wherever possible.

As you begin to work through the cleanup credit process, you'll begin to see a light at the end of the tunnel. Just keep working at it and before long, your credit history will be on the mend, and your score will once again be back on it's way up.

Sources:

MasterCard.com; "Solve Problems buy Paying Off Your Debt"

USAToday.com; "Clean up credit score to land a sweet mortgage rate"

Kiplinger.com; "Clean Up Your Credit"

AnnualCreditReport.com, "Free Credit Report"