How to review your credit reports and pay down your debt
If you’ve already requested your credit reports, now it’s time to evaluate them. This is the first step to start repairing and improving your score. In a previous article we explained what credit reports are and why they matter; now we’ll look at how to review them and what you can learn from them.
What do credit reports include?
While you can hire professional services to evaluate your reports, it’s useful to know how to review them yourself.
In essence, a credit report includes:
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Personal information: full name, addresses, date of birth, and Social Security Number (SSN).
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Credit information: a list of open and closed accounts, the identifying numbers of those accounts, and your payment history for the last two years (your “credit experience”).
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Recent inquiries: who (people or companies) obtained copies of your reports over the past two years.
Understanding this structure helps you spot errors and identify opportunities to improve your score.
How to pay off your debts
Once you understand your financial situation, here’s how to improve it.
Getting out of debt isn’t easy—and one key is not taking on new debt. Practical guidelines:
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Avoid overspending. Over-indebtedness often leads to late payments, which end up hurting your reports and your score.
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Prioritize your debts. Order them and pay them in the sequence that benefits you most (by interest rate, balance, etc.).
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Track your spending. There’s no point in creating new debt while trying to clean up existing balances.
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Measure and monitor. Use tools to calculate net monthly income, average spending, mortgage payment, and other obligations. Pulling these data together coherently can be complex; if it’s hard, consider professional help.
Refinancing and consolidation to repair credit
Refinancing and consolidation can be viable options to repair and improve credit, but they should be approached with caution. A poor implementation can further damage your profile.
In summary
Getting out of debt and repairing your score may be less difficult than it seems. The key is to evaluate your situation well and take the right steps.
