by Beth Burnett
KJRH-TV Tulsa
The national economy might be in bad shape, but your credit score doesn't have to be.
There are 4 steps to clean up your credit, that you can start right now. Like many families, Shawna and Geoff Simpson budget every month. It is a ritual now since they decided to repair their credit. They, like many, racked up debt in college.
"Things were really tight with all the payments and credit card payments, and this debt and that debt and we just decided that we wanted to provide better for our children than we were," said Shawna Simpson.
They enrolled in "Financial Peace University", a Dave Ramsey program.
"It was enlightening to see that other people in our situation were the same as us, and it was also good for us personally to see that we weren't as bad of as other people were," said Geoff Simpson.
The Simpson's are now homeowners, with a good credit score.
So how did they do it? Here's the advice for free!
Step #1: "Paying all your bills on time every month is the most important thing," said Pat Piper, Executive Vice President for Bank of Oklahoma.
Piper says bills, even 30 days behind, can put a blemish on your credit report.
Step #2: If you know you are going to have trouble paying, contact your creditors. "Don't wait until you are already late or maybe your account has been turned over to a collection agency," Piper said.
"You make those phone calls to the people you owe money to and you say look, I am sorry. I know I owe you money and its my responsibility to pay you, can we make an arrangement? So you see your credit score increase as you see less and less of those dings hitting it when you are not making the payments," said Shawna Simpson.
Step #3: Pay off or pay down debt.
Piper says you won't get "dinged" if you pay off and close a credit card, or several, but keeping a card or 2 open, with a balance of less than one third of the credit extended to you helps.
"You should also consider keeping the cards that you've have had for the longest period of time because you have already built history with those cards and that's helping your credit report," said Piper.
"I looked at different ways, do I need to get another job, do I need to work more hours," said Jessica Lannan, a former student looking to pay off college debt.
To pay down student loans, Jessica Lannan used a method some call "The Snowball Effect."
Once she paid off one debt, she paid the same amount toward her next highest debt.
Its like paying off a car, then acting as though the car payment still exists, only paying a different creditor.
"There is freedom and I can go out and shop and buy things and its not going to break my budget," said Lannan.
Step #4: Review your credit report each year.
"Look for errors, and if there are errors, you need to dispute them," said Piper
Finally experts say, be patient. It can take months, even years to see your credit score rise. Experts say the hard work really does pay off.
"I can do this. I had the power and the strength to say it's not gonna own me," Simpson said.
