6 Tips to Improve Bad Credit Score
If you have bad credit, you probably have already got to know all its fallouts. Most likely, you meet not only high interest rates on credit cards and denied applications but also difficulties getting a job, renting an apartment or purchasing a car. This is not the whole list. A bad credit score can seriously affect all spheres of your life. But there is always a way out. You just need to strain yourself and take all the actions you can to get out of bad credit. Here are the tips everyone is able to follow to have done with this bad credit vicious circle:
1. Make Your Payments on Time. Paying bills on time should become your first and main rule if you want to build your credit. Issuers often allow setting automatic bill payments so that money is transferred to pay a bill on a specified date. This way, you will never tend to forget about the due date.
2. Don’t Spend Too Much. While your goal is to leave your bad score behind, you’d better limit your spending. It is acceptable to have a credit utilization ratio under 30%. In simple words, balances on all your credit accounts should not exceed 1/3 of the credit limit you have in total.
3. Pay Off Your Balances Gradually. In case you keep balances on your credit accounts, you should try to repay them little by little. All the debts you have are reflected in your credit reports and impact your credit score. Moreover, if you pay off your entire balances and keep carrying no balance every month, you won’t be charged any interest on purchases. Therefore, you can save your money.
4. Don’t Cancel Old Credit Cards. Another significant aspect of building up credit is having sufficiently long credit history. When you close a credit card you’ve had for many years, the length of your credit history is being cut. In this regard, keep your old cards even if you are not going to use them anymore. Of course, if such cards charge enormous annual fees, probably, canceling them would be the best choice.
5. Stay Away from Applying for New Accounts. When you apply for a credit card or a personal loan, issuers should decide whether you qualify or not. For these purposes, they make a hard inquiry on your credit reports. Such inquiries leave marks on your score and can damage it. Besides, since credit cards for bad credit typically come with high fees, you will only enlarge your debt and make it harder to achieve your aim. So we would recommend you follow this rule until your credit score reaches at least fair.
6. Monitor Your Credit Reports. Multiple studies prove that people who check their credit report from time to time during a year manage their debts much better. Unlike issuers’ checking your creditworthiness, your own requests for credit reports don’t leave hard inquiries and can’t spoil your score. This uncomplicated step will help you see changes quickly and estimate your current state of affairs.
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