Bad credit does not have to be a permanent dilemma. If you are someone who batteles with bad credit, here are the steps you can do to get yourself out of that situation.
Read on to know how you can start your route to credit rehabilitation today.
1. Do not take on more responsibilities than you can handle.
This might not be the best time to try to get a loan or a credit card. Think about resolving the problem at hand and focus on improving your credit rating. As soon as your credit history improves, you will be in a much better position to apply for a loan. On top of that, you can better qualify for lower rates because of your good credit.
2. Do not terminate your oldest credit cards.
Some may quickly terminate their old credit cards to keep away from new debts. Nevertheless, such action may possibly inflict damage to your credit since deleting your old accounts would mean erasing the oldest parts of your credit history.
If you have been using that credit card for years, it may be better for you to keep it. Use your old credit card for minimal purchases and avoid interest rate fees by paying off your balance in full and on time..
3. Submit your current payments on time.
Payment history comprises 35% of your FICO score. If you have delinquent payments in the past, then of course you will get a low score. You can still regain good credit standing by being prompt with your current bills. Paying on time means not paying penalty fees and reduces the risk of repossession on secured loans.
4. Regularly check your personal credit report.
If you live in the US, you can request for your annual free credit report from http://www.annualcreditreport.com. Upon receiving your report, carefully review it for possible errors or unauthorized charges.
Erroneous reporting and fraud are two typical reasons why many people get a lower score. If you discovered wrong information in your report, send a dispute letter to the bureau that released your report to have the errors corrected. Doing so can instantly increase your score by a number of points.
5. Adjust your lifestyle.
Sometimes, the problem with bad credit is a result of uncontrolled spending. Do you realize how much you shell out each month? Sum up your total monthly costs and compare it with your earnings. You may find out that your expenses exceed your monthly income.
If that is correct in your situation, then it’s time to make some adjustments. Look for practical ways to reduce your expenses. Make debt repayment your main priority. Set a definite budget plan and use it as your guide with your monthly spending. Through self-discipline, hard work and determination, you should be free from bad credit a lot sooner than you expected.
