Rebuild Your Credit
Your opportunities are usually limited if you have bad credit. You will not qualify for loans, and if you do, then you’re forced to settle for strict terms that will cost you thousands of dollars during your loan duration. Poor credit can also lead to higher insurance premiums while some employers will check your credit score before deciding to offer you a job.
No matter the situation you’ve been through, the process of rebuilding your credit shouldn’t be complicated. As long as you’re patient and you remain dedicated to the course you can rebuild your credit and obtain an excellent rating. Here are some tips to help you rebuild your credit.
Pay Down Your Debt
Your credit score is also impacted by the amount of debt you owe. Lenders usually analyze your utilization rate before they consider doing business with you. Your utilization rate informs lenders how much debt you owe compared to the amount of credit available to you.
For instance, if you owe $10,000 on your credit card and have a credit limit of $20,000, then it means that you’ve used up 50% of your available credit which is equivalent to a 50% utilization rate which is high and will most likely hurt your credit score. Focus on lowering your debt so that your utilization rate is always under 30% on all your credit accounts and you’ll soon have a good credit score rating.
Use a Secured Credit Card
Using a credit card is one the most effective ways of building a repayment history. A secured credit card will assist you to rebuild your debt payment history faster since it requires you to keep money in a linked bank savings account as collateral security. Since the funds are already there, it becomes easy to get loan approval even when your credit score is poor. Your Payments are also reported to the credit bureaus every month which makes a significant difference.
Pay Your Bills on Time
The only thing that lenders care about is the probability of you paying back your debts on time. Every time you pay your monthly bills on time, you prove that you’re reliable which helps in boosting your credit score. Making an on-time payment on all your accounts is vital. We’re not talking about the credit card only but also house rent, internet, TV, and cellphone. You can set-up auto payments with your bank to help you accomplish this goal.
Check Your Credit Report
Your credit report will help you know where you’re financially. It helps you identify areas where you need to improve. For instance, your credit score will help you see whether you have a lot of late payments or your utilization rate is too high. You are always entitled to one free report from any of the credit bureaus, so make sure that you collect yours and evaluate it.
Do you have a bad credit score and you need to get urgent money to cater for an emergency issue? Consider applying for a bad credit loan, and you’ll get the funds even with a bad credit score.