No one wants to find themselves in a position of bad credit. Yet, it can happen despite our best efforts. Whether you have run into a series of unfortunate events that have battered your savings and left you unable to make repayments on loans, or if you simply haven’t been watching your budget and are now drowning in debt – there is a way out.
You always have a choice when it comes to bad credit. Here are 6 tips to avoid bad credit, so you can get yourself out of debt and set yourself up for a positive financial future.
What Is Bad Credit?
Everyone has a credit score which is a reflection of their borrowing history. Your credit file will be made up of all your past loans and how they were paid back. If you missed repayments or defaulted on your loan, this will show up as a negative listing on your credit file. In turn, these negative listings result in a low credit score.
Here are is how your credit score is calculated:
- The amount of money you’ve borrowed
- The number of credit applications you’ve made
- Whether or not you’ve paid on time
Of course, other things such as bankruptcy and court judgments will also be reflected in your score. If you have a low credit score, lenders consider you to be in a position of bad credit. This means they’re less willing to take a chance on you for a loan, or you will be charged higher interest rates. Read on for some tips to avoid bad credit.
6 Tips To Avoid Bad Credit
After some tips to avoid bad credit? Bad credit can leave you financially vulnerable. Many lenders won’t be willing to take a chance on you, which can result in your spiralling further into debt with no way out. Here are 6 tips to avoid bad credit:
1. Pay your bills on time
This is one of the best steps you can take to help you avoid bad credit. It’s the most important and easiest way to keep your credit score nice and high.
2. Don’t reach your credit limits
Just because the money is available, doesn’t mean you should use it. If you’re using too much of your credit, it suggest you’re spending beyond your means and can lower your credit score.
3. Pay your bills in full
While many lenders offer minimum payments to help you out, it’s best to pay off the full bill in one go. If you stick to the minimum payments, you can find yourself In a cycle of debt without even realising it – and it’s a hard cycle to work your way out of.
4. Don’t apply for credit all at once
Every time you apply for a new line of credit it results as a hard inquiry, which brings down you credit score. It suggests you’re being knocked back by lenders and aren’t in a good financial position to be borrowing.
5. Set up a budget
A budget is your best friend when it comes to managing your finances. It helps you keep track of your spending and also ensures you make all your repayments on time, which will help keep your credit score up.
6. Ask for help
If you do find yourself in a position of debt that you’re unable to get out of, then don’t be afraid to ask for help. Whether that help comes from friends and family, or from your lender, it’s always good to speak up. It gives you the chance to get back on track and make the right financial changes.
More Tips To Avoid Bad Credit
Now you understand the tips to avoid bad credit in the future, what do you do if you’re already in a position of bad credit? Thankfully, there are options available to you to help get you back on track.
The best one is to work with a credit repair company to have any incorrect listings removed from your credit file. They will dispute these errors to get them removed and clean up your credit rating. It’s important to find a business that knows what they’re doing and can be trusted to act on your behalf. Make sure to look out for reviews and research the companies ABN before making any commitments.
If you’re ready to go down the path of credit repair, then speak to the professionals at Clean Credit today. We can work with you to help you achieve financial freedom by removing incorrect listings, unlawful defaults, court judgements and black marks from your file. Get back on track today