Stretching Your Dollar: What can you do to repair your credit rating?

Stretching Your Dollar: What can you do to repair your credit rating?
To raise your credit score, you'll need to tackle the plastic one card at a time.

TOLEDO (WTOL) - Everyone wants to have good credit. Most of us are in the range between 600 and 750, with a number above 700 the best to have.

How you can repair damaged credit

But, how can you repair your credit rating after the damage is done? Stretching Your Dollar takes a look at the top tips to get your credit back on its feet.

First, it’s a good idea to get a look at your credit report from a credit bureau -- TransUnion, Equifax and Experian are the three most common. It’s up to you to make sure it’s accurate. Bureaus can get wrong information.

Second, pay all of your bills on time. This means not being late on your house payment, or rent, student Loans or all those credit cards.

Credit cards present a slippery slope. It’s easy to start out with one or two cards, like your standard Visa and MasterCard, but then balloon to five or more when you factor in gas cards and cards with stores. And if the balance builds up, high interest often kicks in. This can amount to nearly 30 percent annually. And just like that, you’re in trouble with credit card debt.

“Credit card debt has to be the number one reason people’s scores are so low or not where they should be," said financial counselor Teresa Martinez.

Martinez helps people currently in Lucas County Metropolitan Housing Authority housing to fix their credit and buy their own homes.

To raise your credit score, you tackle the plastic one card at a time.

“What we want to do first is get after the card with highest interest rate. Also look at do they have an annual fee?” Martinez said. "We try to pay everything down from highest to lowest. And the balance doesn’t have a lot to do with it.. it does and it doesn’t. Main thing I look at is interest rate first.”

In summary:

  • Pay your bills on time and stay out of collection
  • Avoid having more than five active credit cards.  
  • Keep the balances below 30 percent of the limit. You can ask for a higher limit — doesn’t hurt to try. 
  • Pay your cards down to that magic 30 percent of limit, working on the highest interest accounts first.

And don’t forget, there are scams to watch out for. If you do use credit services, don’t pay up front.

Check out a website called PowerPay, where you can set up your finances and it’ll even walk you through paying the credit card bills.

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