• Kai Dumont - Top Shelf Credit

The #1 Thing You Should Have In Place Before Repairing Your Credit

A very popular question from potential clients is where to start when rebuilding their credit score. Most people believe that the road to good credit starts with paying off all of your past debts. Unfortunately, that is not the case.

The first step to repairing your credit is your budget! Without a budget in place, repairing your credit will be difficult because of financial unawareness.

A budget is necessary before you start the restoration process because you need to know:

  1. Where your money is coming from.

  2. Where your money is being spent

  3. Where your money needs to go in terms of making payments

All of the above will help with being financially aware and contribute to starting the restoration process. Not having a budget can be extremely problematic and damage your credit score significantly. Without a budget it is highly likely you will max out your credit card which damages your score. It is also likely that you will miss your payment due dates which has the greatest negative impact on your credit score.

Did you know that it only takes 1 late payment to drive your score down dramatically?

One recent late payment on your credit score can dramatically decrease your score. Additionally the recovery process to regain those points takes roughly 9 months.

You also should keep in mind a big part of your credit score is utilization. The key to keeping utilization low is having a budget in place. This allows you the capacity to have a credit card available to you, although you don’t need that credit card to maintain your lifestyle. Keeping your balance below 10% as much as possible will help you maximize your points in this category.

So remember, before starting the credit repair process, your budget is vital to your success, and financial awareness is just as important. Without a budget and financial awareness your journey to a higher score will seem more like a roller coaster ride than a race to the finish line.

Need help Creating A Budget You Can Manage? Click here to enroll in Top Shelf Credit’s Budget Class

#budget #creditrepair #finances #financialplanning

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