Many people are looking for easy ways to fix bad credit simply because a bad credit score will disqualify you for almost anything. Luckily, a few debt management techniques and lifestyle changes can help you improve your score.
It may take a while to see an improvement in your credit score
Your credit score is not going to change dramatically overnight, but it won’t take forever either—so just hold on there. So, from the very start brace yourself for some minor to major lifestyle changes which are necessary to fix your credit standing. It is a matter of making a deep commitment and sticking to it to turn your scores around.
Pay your credit card bills on time because not doing so holds down your credit rating
By making payments on time, you are helping them to improve and overcome a bunch of debt mess you had made.
Since your payment history takes up 35% of your credit score, it is so important to pay your bills on time, each month, no matter how busy you are. It is a simple tip, yet the most responsible thing to do, to push your score up and convince potential lenders that you have been changed your money management habits.
You can set up automatic payments by allowing the creditor to automatically deduct your monthly payments from your bank account every month. This is a good option for those who have trouble remembering to repay certain bills. You can also set up automatic reminders on your phone so you won’t miss the due dates.
Pay down your debts
You don’t just pay ‘on time’ you pay it off ‘ahead of time’. Even an extra dollar 20 dollars each month could lower your debt to income ratio—because small payments matter. Lenders see loan applicants with high balances as risky borrowers. So, if you reached the credit limit of your credit cards, you may want to lower that balance as quickly as you can by making extra payments each month.
Keep your credit card balances at zero and don’t make another purchase on it until you have zeroed the balance first
You already know that high balances do a lot of damage to your rating. Charging on your card before you paid it off in full may make it difficult for you to keep the balances within 30 percent of your card’s credit limit.
Stop using your high interest credit cards
If the reason why your credit score hit rock bottom is because you can’t resist maxing out your cards, then focus on managing that piece of plastic.
You don’t have to close your accounts. Just don’t use them yet until you have paid them off. Keep the oldest credit cards to boost your score. But, if you have more than 4 cards, you may have to close the rest.
Consolidate your consumer debts and other high-interest and hard to manage loans
You don’t have to apply for bankruptcy to manage high interest debts which you think are beyond your capacity to pay. There are debt consolidation loans that can help you pay off high interest credit cards and bills. You can use it to you lower interests and fees of your existing debts and simplify payment. Since you only have one creditor to remember, the chance of forgetting your payment date is very slim. You can also use the extra money to embark into a profitable endeavour.
Augment your income
If the lack of money is the root cause of your poor credit score, perhaps it is time to consider getting an additional job, or engaging into a business to boost income. You don’t have to look very far when searching for a job or idea. Simply fill the need-simple odd jobs that you think you can handle well may do for a while, while you’re still looking for other means to fill your income gap.
Create an emergency fund
While you’re paying off your bills to lower the credit card balance and to keep the utilisation rate at its lowest, don’t forget to save for the rainy days. An emergency car repair may tempt you to use your high interest credit cards and skip payments on various debts. So, make sure that you have extra money, or car insurance to cover it. Health emergencies also come and go—and sometimes, they are unwelcome visitors that strike you when you least expect it. When you’re building credit it pays to have your insurance to cover common emergencies that you think may come your way.
Always get free copies of your credit report from the major credit reporting companies in the country. You’ll never know whether someone else has stolen your credit information or there are clerical errors that lowered your credit rating. One of the easy ways to repair credit is to use a credit repair tool to check your file for inaccuracies and wrong entries to ensure that your credit file reflects your actual credit rating.