Bad credit is simply the opposite of a good credit score and is important when it comes to determining your financial success. What is a credit score? It’s a 3 digit number that is calculated taking the help of your data rich credit report. A good score on the report means lenders won’t hesitate when it comes to granting a mortgage, loan or credit card as a good score only proves your creditworthiness.
Lenders have different standards when it comes to measuring a good credit score but generally, a good credit score is considered to be 720 or higher than that, so it’s very important to keep building and improving the score as that will provide access to favorable interest rates as well as the highest rates of credit approval.
Following are 3 important things you can do right now to fix your bad credit score:
Check Your Credit Report: DIY credit repair begins with your credit report, which means that the first thing you must do is request a free copy of your credit report and review it. The report will typically contain data and information that’s used to calculate your credit score and sometimes errors and discrepancies in the report are responsible for the bad score. By reviewing the report regularly, finding and disputing such discrepancies (if any) will become easier.
Setup Payment Reminders: One of the biggest contributors to a good credit score is making all and complete credit payments on time. This will increase your credibility and credit worthiness among lenders, i.e. will give you access to favorable interest rates and other perks. You can very easily setup a payment reminder through the online banking portal of your particular bank that will send an email or text prior to the due date of your payment.
Reduce the Amount of Debt You Owe: While reducing the amount of debt that you owe sounds good; in practice, it’s difficult but not impossible! The first thing that you will need to do is stop using your credit cards, even in an emergency. This is important as trying to improve credit score while debt and payments are accumulating isn’t going to help in the least. Make a list of all open credit accounts with the help of your credit report, or check all recent statements to determine how much you owe and what interest rate is being charged on each account.
Figure out a payment plan that places most of your available budget for the purpose of debt payment, especially towards high interest cards first while maintaining your other accounts through minimum payments.
Do you need help in coming up with a good battle strategy to better maintain your credit accounts and giving payments in time? Or do you have trouble staying under a credit limit and often max out your credit limit? You should definitely consider applying for a secured credit card to end this ongoing cycle!