No need to rewrite history to repair your credit rating

This was originally published on Monday, September 30, 2013, in the Pacific Daily News.  Click here to subscribe to the PDN.

Your credit report is used for more than just getting loans.

A good or bad credit score can determine many other things and many feel that the way you handle credit is the same way you handle responsibility.

Having a poor credit rating though is fixable. It may take some time, but it is definitely worth it.

If your identity has been stolen, there are certain steps to fixing your score.

I recently covered how to repair your credit if you find yourself in this predicament.

You can find past articles on the Money Matters blog But what if your credit was due to late payments? Although you cannot rewrite history, the passing of time will eventually restore your good credit rating.

Also take these tips into consideration:

• Timely payments. It cannot be stressed enough how much this will start to increase your score. It will not happen immediately since missed payments stay on your report for seven years after making the payment. Decreasing your debt is important, but paying your creditors back in a timely fashion is better to improve your score. Stay on track by signing up for auto-pay or having an allotment made from your paycheck or banking account. You will be less tempted to spend it elsewhere.

• Do not over extend yourself. The last thing you want to do is start paying your credit with other credit.

By moving credit around, you are costing yourself more in interest fees. Do not agree to payments that are going to cause more financial hardships. If you are having trouble making payments, contact your financial institution. Revisit your monthly budget. If you can afford an extra payment every other month or $20 more a month, do it. It will add up and minimize the time and interest of the debt.

• New credit. Some believe that opening up a new credit card or loan can improve your score. Yes and no. Do not open up a new account just to have a better score, especially if that is going to create more bills that you will struggle to pay. Pay off the accounts that you have first, open a new account only if you can afford to pay off the balance or make the monthly payments.

• Old credit. If you have paid off a credit card, don’t close the account. Keep the account open and use it sparingly, and pay off the balance right away when you do use it. This account could also be used for dire emergencies.

• Bargain. Contact your creditors and ask to remodify a loan or settle a balance for less. The worse thing they can say is no, but if they can work something out, you will be glad you asked. If you make a deal, be sure to get it in writing, the same goes for the IRS. You may be able to remove a lien off your credit report if you enter into an agreement to repay back taxes.

Once you have worked hard to get your credit score healthy again, be very diligent and stay on top of your bills. Review your score occasionally to ensure that your efforts are making a difference. It is possible to repair your credit score, but it will take some time, new habits, patience and discipline.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at and read past columns at the Money Matters blog at


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