Having bad credit can put you under a lot of stress. If you don’t qualify for loans, credit cards, or mortgages, you may find your financial options extremely limited. You may have to choose a loan with higher-than-average interest or tie yourself to super-high insurance premiums. Luckily, whether you’ve been declared bankrupt, divorced, or just made a few mistakes, there are ways and means to improve bad credit.
You could also take advice from an online credit repair resource, such as BWCCU.
A How-To of Credit Repair
Your first step should be to know what you’re dealing with – check your credit report. You can get one free report from every credit bureau per year. Check for errors and if you spot any, flag them immediately. Having errors removed can hugely improve your score right away.
One of the fastest ways to repair or rebuild bad credit is to take out a credit card. This can sometimes be more difficult if you do have a poor score. But then, many lenders will help you out with a secured credit card.
Secured credit cards work by making sure you have enough savings to pay your bills on time – these savings must be kept in an account linked to the card itself. Because you can prove you have the money, it’s much easier to get approved. Simple! Your timely payments are reported to the credit bureau, so you can prove to them that you can pay on time, every time.
Another critical factor in your credit score that you may not have considered is your credit utilization. This is the percentage of the total credit you’re using – if your total credit limit is $5000, and you’re using $4000 of it, your utilization would be 80%. High credit utilization can negatively impact your score, so make a plan that helps you reduce it. Cut back on your expenses and put that into your credit debt – under 30% will help you improve your credit score.
One of the biggest things that impacts your credit is, unsurprisingly, your payment history. If you have a ton of missed or late payments, your score will drop. If you can’t make payments on time, don’t ignore it! Get in touch with your credit provider and work something out. They’ll appreciate it, and it will help you keep your score up as high as possible. Once you’re back on a level, you can set up automatic withdrawals to make sure you’ll never miss a payment again.
It can be tempting just to close your credit account if you’re very far behind on your payments. Your repayment plan may even force you. However, avoid this whenever you can. The longer your credit account has been open, the more significant a positive impact it has on your overall score.
Stick With It
Boosting your credit score takes time and effort. But then, it’s possible. Manage your finances effectively, reduce your debt utilization, and consider a secured credit card. You’ll be on your way to great credit before you know it.
