How to Fix Your Credit

Your credit score plays a major role in the big purchases of your life.  It can make or break your ability to buy your first home, get a loan for a reliable car, or get that cell phone you’ve been saving for.  So if your credit has some dings, improving your score is well worth the effort.

MoneyBut where do you start?  If looking to fix or improve your credit score in Grand Rapids, start by reviewing the basics.  First, what determines your credit score?  Your FICO score, which is used by many lenders, is judged on the following elements:

35% – Payment History
30% – Amounts Owed
15% – Length of Credit History
10% – Types of Credit in Use
10% – New Credit

As a result, your credit score is ultimately determined by years of credit and borrowing history.  So, to fix your credit score in Grand Rapids (or any city), you should start by finding and correct any errors in your credit report.  Then, follow some basic guidelines and rules to establish and improve your credit behavior moving forward.  Let’s go into some more detail.

1.  Check your credit report.

This is a great first step, because it will help you understand your current situation.  And it is free! In Michigan, you are entitled to one free credit report per year from each of the three major credit reporting Bureaus (Experian, TransUnion, and Equifax).  One excellent place to get your report is  If you want to be really savvy, select one of the bureaus every four months… that way you can monitor your own credit, all for free.

This credit report will contain information about your payment history, and may include errors (such as incorrectly reported late payments or amounts owed).  If you see any errors on your report, you can dispute them with the credit bureau.  If any errors exist, correcting them can really help your score.

Money2.  Create systems to help pay your bills on time.

Payment history is the largest portion of your FICO Score.  And while you can’t change the past, you can set up better systems for yourself moving forward.

You can use a bill calendar, either online or off, to remind yourself when your payments are due.  In Grand Rapids, most utility companies and cell phone providers allow you to set up Automatic Payments from your bank.  Many Michigan mortgage companies, car loan providers, and other debt servicers have similar systems.  This can help prevent mix-ups during busy weeks.

3.  Pay down your existing debt.

This is very important, but of course it is a lot easier said than done.  If you can pay down the principal, rather than just making minimum payments on your debt, you will put yourself in a much better position.

If you are overextended with your credit cards, do your best to stop using credit cards for new purchases.  Identify which of your cards or loans has the highest interest rate, and pay that one down first.   This way, you are getting the most ‘bang for your buck’ while paying back what you owe.  This has been shown to be one of the quickest ways to fix your credit score in Grand Rapids over time.

If you are having trouble making ends meet, contact your creditor and/or a legitimate credit counselor.  Both can be lifesavers when it comes to creating a payment plan that works.  But beware of scams!  Protect yourself by reading this information from the State of Michigan Attorney General’s office.  It has great tips on how to avoid credit scams.

Letter4.  Keep your balances low on your existing cards.

Even if you pay off your credit cards each month, the amount owed when the statement comes due often shows up on your credit report.  High outstanding debt can be a negative contributing factor to your core.  Ideally, it is best to have less than 30% of your credit used.

5.  Avoid opening new or closing cards unless necessary.

If you’re looking to fix your credit score, don’t attempt to open up new cards just to increase your total credit limit.  Additionally, don’t open new cards just to get a ‘better credit mix’ or close unused credit cards as a short-term strategy to raise your credit.  It can backfire, and end up hurting your score.

There are many other great tips on how to improve your credit score.  Some excellent resources include the credit improvement suggestion sites for Experian, TransUnion, and Equifax, as well as legitimate credit counselors.  Overall, remember that the process takes time, and making sound payment decisions will be your best ally.

As always, feel free to contact us at Honeybee Homes at (616) 606-3390 for additional help regarding your home.