So you have seen the light, reformed, and have started to be good with your use of credit. Still you have a bad reputation from your former life as a credit card junky. How can you improve your credit history?

First, your credit history will gradually repair itself. Don’t deal with “credit repair firms” or waste your time opening good accounts. Moving won’t help either. Here are the things that *will* help:

Admit your past mistakes readily. Like a former alcoholic you must be constantly vigilant against slipping up again. Those who are not wary of their old habits are the ones most likely to fall into debt again.

Pay off back bills. They don’t go away. Deal with each place you owe seriously.

Start paying all your bills on time. Live within 65% of your take-home pay. With the remaining 35%, put 15% into savings and an additional 10% toward those big purchases that used to swamp you. For the last 10%, you can be generous to those whose financial fortunes are even less fortunate than yours. Charity always helps people realize the extravagances in their own lifestyle.

Reduce the regular monthly payments you must pay (including your mortgage) to less than 40 percent of your monthly take home pay. Reducing regular payments, even if it is just features on your phone service, is the easiest way to save money every month.

Fix any mistakes on your credit record. Do this yourself. Don’t contract with a “credit repair firm.” Credit repair firms cannot do any magic that you can’t do yourself, and the process of learning about your credit record provides a perspective of how your behavior is viewed by others. This education will help you much more than hiring someone else to learn the lessons you need.

Cancel any credit cards you are not using. (The accounts will not actually be taken off your credit history, but they should be shown as closed.) It is better to have no credit cards and have no debt. The benefit points offered by most credit card companies are not worth the additional impulse buying having them causes.

Give the credit bureau a reason for any black mark on your record. Explain what happened and point out that these accounts are now up to date. Your explanation becomes part of your file.

Be sure that the credit bureau has removed any data older than 7 years and bankruptcies older than 10 years. This should happen automatically, but sometimes credit bureaus slip up. If you can truly reform your ways for seven to ten years, your credit will be spotless.

IF you straighten out, it is sometimes possible to get your credit back in 6 months to a year, but you don’t need to have a good credit rating to live within your means. The best financial security comes from having money in the bank and some left over to invest for growth. The discipline of living within 65% of your take-home pay causes more wealth than having a good credit rating ever could.

Photo by Louis Smit on Unsplash