It can be a hard situation to find yourself in when you have poor credit. It can make borrowing money difficult, if not impossible. When you are able to find a lender to support you, it can be much more expensive with a higher interest rate than it would be if you had better credit and where therefore less of a ‘risk’ in the eyes of the lender. If you want to rent somewhere to live, poor credit can destroy your chances, or it can mean that you have to have a guarantor to help you, which isn’t always possible.
It makes sense, therefore, that you fix your credit as soon as you can after the initial problem that caused your score to dip. Here are some ways to do it; it’s not as hard as you might think.
Check Your Credit File
Before you can start improving your poor credit, you need to know what the problem is. This is where checking your credit file is essential. There are many companies which can show you including Experian and Equifax for a small fee. If you aren’t sure which company to pick, there are also numerous online websites that will show you all of your ratings from each company in one place. It can be more expensive, but it also gives you a better overview.
When you receive your credit report, take a good look through it and understand why it is that your credit is so bad. Once you know, you can take the necessary steps to fix it.
No one is perfect, and that holds just as true for credit agencies as it does for anyone else, particularly when they rely on computers to collate the population’s credit score. Make sure you are sure that everything in your file is correct. If it isn’t, you will need to dispute it as soon as you can because it could be dragging your score down unnecessarily. It could be that your name is linked to someone you don’t know, for example, someone who lived in the property before you moved there, or someone with a similar name. There could be a negative mark against you for a loan that you missed payments on, but that was actually entirely paid off years ago.
When you dispute the issue, do it in writing so that there is a record of what was said and done. It can take some time to fix the errors, but it is worth doing to improve your score, or rather, boost it to where it should be.
Speak To Lenders
You may have had issues in the past, and you weren’t able to pay your debts on time, if at all. If everything is better now and you are completely up to date on your payments, or you’ve even paid everything off altogether, but the negative marks still remain on your report, you might want to consider asking your lender to remove them. If they aren’t removed, they will stay on your report for six years, pulling your credit down all the time they are there.
The worst that can happen is that the lender will say no, but you will then be in the same situation as you are now, and no worse off for it. However, they might say yes; after all, they now have their money, and it’s not in their interests to keep your credit score low. It won’t make much difference to them, but it could be hugely positively impactful for you.
Apply For A Credit Card
This advice may seem counterintuitive, but it really can help even if getting another credit card is the last thing you want to do because you’ve had trouble with one in the past. Your credit score will improve if you have credit that isn’t being used. If you have a card that is maxed out, it doesn’t look good on your report, but it looks far more positive if you have another card with no balance on it at all. If you’re worried about being turned down for a credit card, don’t be. There are cards available for those with poor credit; you can click for more information. Having one of these cards can quickly and easily repair your credit, but be careful not to overspend on them.
Don’t Pay The Minimum
If you continue to only pay the minimum it will take you a long time to reduce the amount you have borrowed, plus you’ll end up paying a lot more in interest over time. If you can pay more, then you should do. It’s good to have savings, and you shouldn’t ever use every penny. However, if you can double or triple the minimum payment required each month, you can do a lot more good, and the debt will be repaid quicker, meaning you can easily top up your savings when you don’t have to pay out on your loan or credit card any longer.
Check The Interest
If you have more than one debt, take a look at the interest charges. The one with the highest interest is the one you should pay off first, as this will save you a lot more money over time and will look good on your credit report. After you have dealt with the high-interest debts, move onto the newest debts. When you are done, you should be left with old, low-interest debts which don’t have such an impact on your credit score and although you should work at paying them off too, they aren’t such a priority. You’ll have a lot more money ‘spare’ each month anyway because the other debts are no longer being paid, so you should be able to get rid of these fairly quickly.
Leave Accounts Open
When you have completely paid something off, it can be tempting (and satisfying) to close the account down. However, doing this can have a negative impact on your credit score as it will be lowering the amount of credit you have available. As mentioned earlier, the more unused credit you have, the better your score is, so keeping the accounts open but unused can really help.
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