Experts suggest that rebuilding credit scores this New Year should be top priority rather than merely getting rid of old debts. Every New Year people go about making resolutions to get out of debt, but never think of rebuilding their credit scores. Owing to the recession, there were a number of credit scores that were hit in a big way as credit card holders were struggling to make payments on time. Todd Albery, CEO of Quizzle, a Detroit-based website on credit information, states that credit scores have gone down by 20 to 30 points for most card holders. Free credit scores and credit reports are provided by Quizzle once in 6 months and according to the information available on its system the national average credit score is around 657. However, that average dips to 647 and 603 in Michigan and Detroit respectively.
Consumers can expect to avail better interest rates only if the scores are 700 and above and those who are in the range of 600 or lower than that may not be eligible for loans at all. Most people are not aware of what is required to rebuild their credit scores in order to get to a better position financially. Conventional ways of getting out of debt does not work anymore. Earlier on, individuals could avail home equity loans in order to pay for their high-interest credit card bills, but that is no longer possible as the home values have seen a dip. So, borrowing against your home is no longer an option.
As these options don’t exist, you could use other options to work on your credit during 2012. For instance, you could first work on improving your credit score and then think about reducing your debt. First of all, you must try to obtain a free credit report and check the credit card debt, liens, and loans etc., and also get hold of the free credit scores. Make the credit card payments on time every month and ensure that you pay down all your credit card debts. Keep track of the money you borrow on your cards and use only a small portion of the available credit limit on your card. This will help in improving your credit scores. It is important to ensure that you don’t begin the New Year by closing your credit cards. Always read the fine print before accepting new offers.
