How to Budget to Get Your Credit Score Up
- 1). Create a budget. List all of your expenditures for a whole month. Use your checking account statement as a guide. Categorize your spending. Create categories such as dining, entertainment, rent, car loan, credit cards, savings, etc.
- 2). Subtract your expenditures from your monthly salary to see if there is any leftover funds. Try to find extra funds in your budget by trimming unnecessary items and reducing spending in areas such as dining and entertainment. Earn extra income through overtime, extra shifts, a garage sale or a second job.
- 3). Take excess funds and create a three- to six-month reserve to prepare for unexpected expenses.
- 4). Check your credit report through an online provider, such as FreeCreditReport.com. You will be asked to provide your full legal name, Social Security number, date of birth and credit card number. Analyze your credit report for negative items, errors and high debt balances. Contact the credit bureau immediately by clicking on the error items to begin the process of removing any errors from your report.
- 5). Use excess funds, once your reserve is created, to begin paying down debt listed on your credit report. Tackle any collections, judgments and liens first.
- 6). Pay down credit card and line of credit balances next. To lessen their impact on your score, pay them down to less than 30 percent of your available balance. It is in your best interest to pay them off completely, however, lowering the balance to less than 30 percent of the limit will raise your scores immediately.
- 7). Continue paying on your debts until all are paid in full. Use the excess funds created from debt repayment to build up savings further and reduce your need for future use of credit.
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