Got a bad credit? Don’t sweat it.

Written by: Lori Gracing

Your credit is the number calculated by loaning organizations to see if you are qualified to get a loan. It is calculated by keeping all your credit history into account. If you have been late with your installments or have a history of inconsistent payments, you are more likely to have a bad credit score. A bad credit score means that you are most likely to face difficulty in getting an apartment or a house loans. You won’t be granted a cell phone contract and even have difficulty purchasing a car. Let’s take a closer look into the issue.

How does a bad credit affect you?

  • High rates of interest. Having a low score makes you a risky option for many lenders. Thus to combat this lacking they tend to increase the interest on the loan. A low scorer would have to pay more interest than a good scorer. A low scorer will also have stricter payment schedules.
  • Getting loans is difficult. You may get rejected for many loans because of your bad score. Your applications will be denied and getting a house, a car and a business loan will get increasingly difficult.
  • Insurance premiums will also be higher for you. Insurance companies check your credit history before providing you with an insurance service and you will have to pay a larger amount in contrast to other people.

But wait, don’t you worry.

A bad credit is not a permanent number; it can always go up. Here are some things you can do to improve it and set fire to your worries.

  • Check your score again. There may be a mistake made in the calculation. Get your credit score checked again for it may increase. According to the Federal Trade Commission 1 out of 5 people have a faulty credit score. Get it regularly checked to see what you need, and how you can work on that.
  • Be punctual with your payments. A bad payment history can have a deteriorating effect on your credit screen. It comprises 35% of your credit score, so it is a major determining factor. Make sure that all your payments are timely and the exact amount as determined. You can set a reminder on your cell phone or you can even mark the calendar hung in your bedroom.
  • Use your credit card wisely. If you keep using your credit to its limit, it will impact your credit score negatively. Try to only use your credit in extreme emergencies. If you have a large ratio of credit use, you will lose credit score points. To check your utilization ratio, check your credit card statement for the past year. Add the balances from each credit statement and divide by 12. That’s the credit you use each month. A credit ratio less than 25% is considered much favorable.
  • Don’t be quick to remove the history of your paid loans. This can help improve your credit history. If you have a long history of timely paid installments this can play in your favor as it is the evidence of your reliability. Avoid closing your unused accounts, as these can add to your credit score.
  • Don’t apply for a large sum of money as it will cause more investigations on the end of the credit provider. Having multiple hard inquires on your report can decrease your credit score.
  • Pay off your recent debts first, many firm check your recent record and keep that in account rather than your older ones. Paying off the recent ones will help increase your credit score exponentially.
  • Dodge filing for bankruptcy as it can damage your credit score. It is a big dip to your account and will stay on your credit report for as long as 10 years. Many lenders reject applications with bankruptcy on them without giving it a second thought. You’ll have twice more trouble getting loans than otherwise.
  • Get a new account, this may be difficult considering your history and debts. But getting a new credit account can bring a desired change in your credit score.
  • While repairing your credit score you may face many ups and downs. Don’t worry this will happen and after a while your credit score will stabilize. Don’t lose hope and keep working to improve it.
  • Talk to your creditors. Make your creditors listen to you and tell them about all your financial issues. Many creditors will be considerate to you and will even try to help you out. Instead of ghosting on an installment, arrange a meeting and tell them the reason and hopefully they will help you devise some sort of plan.
  • Lastly, have patience, your credit score will not change overnight and it will not even change in a month. It will take a long time to bring your credit score up. You need to wait and work hard for it. Develop habits that are long term, pay all your utility bills on time, maintain your credit ratio and pay off all your debts. Keep a track of your credit score and see what is causing different bumps this will help you work on certain areas.

Having a bad credit can surely impact your loan acquisition negatively, but it doesn’t have to be that way. You can turn your financial life around by following the points mentioned above. Unable to loan a car now? Wait and work. You’ll be able to get a car as soon as your credit score reaches an acceptable value. Stay steadfast and bring healthy changes in your finances.


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Got a bad credit? Don’t sweat it.

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