How To Fix Your Bad Credit in 5 Easy Steps
Many individuals fail to realise how important it is to review and check their credit scores until it’s too late. Your credit score will need to be provided throughout your life for various purchases, even life events. It can be crucial for determining whether you will be successful in securing these purchases or not.
From purchasing your first home to applying for a rental property, thorough credit checks will be made to determine whether you’d be a suitable candidate for these investments. If your credit score is less than satisfactory, you may find that you’ll be rejected for assets such as the above or that you’ll find it much harder than those with good credit scores to achieve them.
However, if you are in a position where you have bad credit, all hope is not lost, and you can take measures to improve or fix your credit rating. Whether you’re trying to make yourself a more attractive candidate for lenders, gain approval for a particular credit card or trying to gain permission to rent an apartment, we’ve outlined several easy steps to help individuals with bad credit improve their current score for better financial freedom.
Obtain A Copy Of Your Credit Reports
No industry is perfect, and that includes the credit system. Due to inaccuracies and errors, loads of individuals have bad credit scores that make them seem like risker candidates than they are. Therefore, one of the best ways to ensure that your credit score remains consistent with what you’re spending is by routinely checking and reviewing your report by obtaining copies.
Errors and inaccuracies can lower your credit score significantly, which is why it’s essential to get copies of your information for your records and ensure that no mistakes are being made to make you look worse than you are.
Requesting copies of your credit reports are also valuable for determining whether any fraudulent activity has taken place so that you can spot suspicious activity immediately and report it to the relevant authority if you suspect fraud.
Consolidate Your Existing Debts
Consolidating your existing debts is another way individuals can hope to bring their credit score down or fix it entirely. If you have multiple credit cards, each with varying amounts on them, you could consider consolidating the debts across each card, which will make you look more favourable to lenders, brokers, and banks.
Depending on how much debt you owe and the timescale you wish to eliminate it in, various options are available to individuals. However, some are better than others and depend on the individual’s circumstances. One of the most popular ways to consolidate existing debt is by taking out a debt consolidation loan through a broker or bank.
Consolidation loans work on the basis that you borrow what you owe, enabling you to pay off the debt on your credit cards and leaving you with a particular loan to repay instead of multiple. Taking out a debt consolidation loan allows you to manage your repayments more efficiently by giving you just one to focus on and paints an accurate timescale of when you’ll be debt-free.
Contact brokers such as PayDay UK and talk to a team member about their Pay Day Loans and other services for more insight. All of which can help you consolidate your debts and become more financially free.
Check The Report For Any Errors
You can request a copy of your credit report once a year from your chosen creditor, which will outline your credit history in total, from credit cards, loans, accounts sent to collection agencies and any legal action set against you.
Once you receive this, we recommend combing through the report thoroughly and checking for any errors, no matter how minute. Even the most minor mistakes can reap the most significant consequences, such as being chased by debt collectors, loan refusal or a higher interest rate mortgage which may be challenging to rectify.
As you go through your credit report, look for any of the following errors:
- Fraudulent activity
- Incorrect personal information
- Duplicate accounts
- Missing accounts
- Accounts that aren’t in your name and many more.
Ensuring that you routinely check your credit reports each year can minimise the scope for these errors to appear or allow you to rectify them quickly if they do. If you notice an inaccuracy on your report, inform the relevant authority as soon as possible, no matter how small. Any delay in reporting these errors can reflect poorly on you, and some credit companies may neglect their duties leaving you to take care of these issues yourself.
Always Pay Your Bills On Time
Your credit score comprises 35% of your payment history; therefore, it is essential always to pay your bills on time so that this isn’t affected. If you’re looking for a simple way to fix or improve your credit score, one of the best ways to do so is to ensure that you meet the deadlines for your monthly bills.
You may be thinking that this is near impossible, especially if you’re struggling financially anyway. However, an easy way to ensure that you’ll achieve this every month is by automating all your monthly outgoings. Doing so will prepare you weeks ahead that a certain amount of money will come out of your account, so you won’t be surprised when you check your balance.
Additionally, you may find that your spending habits start to decrease as you near the time of the month when your bills are automated. You subconsciously know that you need to allocate a certain amount and see that it cannot be spent or risk going into your overdraft. We recommend scheduling your bills to automatically come out of your account the same day you get paid; that way, you don’t even see the money and won’t be tempted to spend it.
Alternatively, if one of your providers doesn’t offer automated payments, we recommend paying the bill as soon as you receive it. Doing so will get it out of the way, and you know that the rest of your money is yours to do with as you wish, instead of having a guilty voice in the back of your head notifying you that you have an outstanding bill during money-spending intervals.
Don’t Close Old Credit Cards
As you start implementing some of the suggestions on this list, you may begin to realise that you’re left with a multitude of old, empty credit cards once you’ve paid off the balance on them. It may be tempting to close these accounts because of this and to minimise the temptation of starting to spend again.
However, keeping your old credit card accounts open can help you build up a long credit history that is often suitable for lenders, brokers, or banks to see so that they can see an accurate timeline of your borrowing and repaying the money. Not to mention, it also makes up another 15% of your credit score, so it’s worth hanging onto those old accounts for a little longer!
On the other hand, some credit companies can charge a fee for inactivity or even close your account after a while, and if this is the case, it might be within your interest to close the account entirely.
