It does not matter how old you are, how much money you have, or what your profession is, one thing you definitely need to be concerned with is your credit score. This is a score that lenders and banks can see if they are considering giving you a financial product, be it a credit card or a home loan. If you do not keep a track of your credit score, you may find that this puts a halt on your future plan as you are not able to secure a mortgage or any other financial products you require.
So, what happens if you have a bad credit score? There are a number of different reasons why this could occur. You may have reached a stage of financial difficulty in your life for one reason or another, which has meant you have become reliant on credit. Or, your score may be bad simply because you have never checked it or maintained it, and so you have made careless errors such as late payments without even realising it. Another reason why people have poor credit scores is because they do not have any credit history whatsoever. You may think never taking out a credit card is a good thing but it can hinder your credit score dramatically. This is because credit report agencies have nothing to base their decision on. They can’t tell lenders whether you are reputable to lend to or not because they simply don’t know. This is why it is a good idea to take out a credit card and pay it on time every month so you can show you are someone credible to lend to.
Steps to take if you have a poor credit rating
If you have a poor credit rating, there are a number of different things you can do to improve this. Here are some suggestions:
- Download a full copy of your credit score – The first thing you need to do is make sure you download a full copy of your credit report in full. This is beneficial because you will be able to see all of the details regarding the money you owe and to whom. It could be that your credit report actually has a mistake on it. Is there an account that has not yet been settled on your report, despite the fact you paid it off months ago? If so, you need to get in touch with the lender so that they can rectify this with the credit agency. You will also be able to see what is having a negative impact on your score. It could be, for example, that you are using a high level of the credit that is available to you or that you have made a number of applications for loans and cards in the past six months. There are many different factors that influence your score, so you need to get to the bottom of the negative factors relating to your score so you can rectify this.
- Lend responsibly – If you have a bad credit score, it is probably not a good time to start taking out more financial products. Nevertheless, there are scenarios whereby this simply cannot be avoided. For example, if you need to fund a repair or you require a new car. In this case, choose your loan with care and make sure you are eligible before you apply. Head to https://www.onlinecash4payday.com/bad-credit-loans/ to find out more information about the loans that are available for people that currently have a bad credit score and would not be eligible for other types of loans.
- Put together a budget – The next thing you need to do is put together a budget so you can have a complete understanding of the money you have coming in and going out every month, and therefore, how much is left over. When putting this together, make sure you do not leave out any type of expense, no matter how insignificant it may seem. You also need to attribute a chunk of money to your living expenses every month. Make sure that this is a realistic amount. You will then see how much money you have to spare per month. You can then determine how much you will be able to put towards your debts, giving you a realistic picture regarding when you will be debt-free.
- Improve your money management skills – You also need to make an effort to improve the way in which you manage your money. Putting together a budget is an important step in this but there are other approaches you can use too. Read my money management tips here: http://simplytnicole.com/2018/07/13/money-management-tips-to-make-your-life-easier/. From tracking your spending to looking for secondary income sources, there are a number of different things you can do to improve the manner in which you manage your funds.
- Pay the most expensive debts first – Rather than trying to pay off all debts at once, you need to start with the most expensive and work your way down. The most expensive is the one with the highest APR. Make sure you make your minimum monthly payments on all cards, though – you cannot neglect your responsibility to do this.
So there you have it: the complete guide to fixing your poor credit score. Hopefully, you now feel more prepared in terms of devising a plan that will help you to rectify your credit rating and make positive changes. If you’re still struggling, then there are companies that can help you. Check out https://repair.credit/ for more information. While your rating will not change overnight, if you stick to the tips that have been provided in this blog post, you will surely notice a difference as time goes on. Simply burying your head in the sand and hoping it will sort itself out is never a good way to go about things.