Tips to Rebuild your credit
Many doors can be closed to you if you have a bad credit score. You will not qualify for loans, or you may always be forced to settle for more strict terms that can cost you a lot of money. A poor credit score can also result in higher insurance premiums and can even limit your employment opportunities since some employers will check your credit score before they hire. The process of rebuilding your credit score doesn’t have to be complicated. Below are some tips that can help you rebuild your credit faster.
Always Check Your Credit Report
Knowing financial rating is the starting point of rebuilding your credit score. It gives you a clear picture of where you need to improve to get back on track. With the report, you can identify whether you have a lot of missed or late payments and whether your debt utilization is too high.
Your credit reports give you clues on what items you are supposed to tackle first to improve your score.It is your right to get a free credit report from the credit bureaus once per year so don’t fail to collect yours. Make sure that you check your report for any errors or fraudulent accounts. If you find something which isn’t right, dispute it and fix it as soon as possible.
Keep Your Debt to a Minimum
Keeping your credit to a minimum is a little bit technical since it involves the credit utilization ratio. In simple terms, the credit utilization ratio is the amount of debt you have compared to your total available credit.
For example, if your available credit on a credit card is $100 and you have $80 in debt then you have a poor ratio of 80%. The lower the debt, the better the score. Always pay down your debt since your debt score determines about 30% of your credit score.
Learn to Pay Your Bills on Time
Paying your bills on time can also help rebuild your credit. Missing to pay your utility and other non-credit bills plus late rent payments can be reported to the credit bureaus which will lower your credit score. Establishing reliable payment pattern is vital to rebuilding your credit.
Avoid credit reports that indicate missed bill payments or regular late payment. You can consider setting up automatic withdrawals to help you avoid missing crucial payments in future.
Use a Secured Credit Card
Using a credit card is one of the best ways of building your payment history quickly. If your poor credit score already disqualifies you from getting a regular credit card, then go for the secured credit card.
The difference between a regular and secured credit card is that a secured credit card requires you to have some money in a linked saving account as collateral security. It is easier to get an approval with a secured credit card regardless of your credit score since the money is already there.
Should you require a quick loan to get you through a time of emergency you can always apply for a bad credit loan online using online lenders such as Cash Depot . This financial provider typically provides loans within one day and can even help you rebuild your credit score.