While living with bad credit may be possible, it is quite difficult especially living in North America.
When it comes to maintaining a good credit score, little mistakes can easily damage any positive progress you may have made. One of the most common ways one can damage a great credit score is by missing payments.
Once your credit score drops below 600, you’ll find that loans are more difficult to acquire and your interest rates will go up. Another disadvantage of a poor credit score is the fact that you may have to pay more for insurance – and you might not be able to purchase certain great things such as a home or a car.
Several major activities can deal a blow to a great credit score, and they are; Collections, Late Payments, Foreclosures, Repossessions, Tax Liens, Divorce, and Bankruptcy.
Rebuilding your credit score might be quite difficult but with consistency and dedication it is possible, and it can end up being one of the best decisions an individual can make.
Below are some great steps to follow when attempting to rebuild your credit score.
Retrieve the latest copies of your credit report
When it comes to rebuilding your credit rating, it is important to take this first step. You cannot repair what you don’t know needs to be repaired.
Therefore, you need to go through your recent credit reports. By doing this, it gives you appropriate knowledge regarding what needs to be fixed. Try to identify the negative items that may be responsible for the poor credit score.
Review your credit reports for errors
After receiving the latest copies of your credit report, it is now time to review your credit report for any errors.
Sometimes your credit report may consist of so many pages, which might make reviewing it tiresome and confusing. It is advisable to take your time and check for errors such as; incorrect information, wrong account details, the payment you made early but were reported late, or accounts that have crossed over the conventional credit limit.
If you happen to discover some errors, it is advisable to open a dispute regarding the errors.
Make sure your payments are on time going forward
When it comes to your credit score, payment history is the major factor that determines whether a score will be great or mediocre.
In a nutshell, payment history is the biggest factor used in the calculation of a credit score. Make plans to have your payments deducted directly from your checking account. If by mistake, you fail to make payment on time, contact the creditor immediately to remove the late payment from your account.
Another strategy to make sure your payments are made on time is through debt consolidation. This is the process in which you take all of your debt (credit cards, loans, collections payments) and merge them into one low interest rate loan. Doing this will allow you to focus on making just one payment per month, on time, and you will even save money in the process by getting a lower interest rate.
Get a secured credit card
When it comes to improving your credit score, getting a secured credit card is one step to achieving it.
Try to apply for a secured credit card using your bank account as collateral. It is also important to choose a secured credit card that can be converted to an unsecured card after a period of usage.
Also, go for cards that do not charge application fees and offers low annual fees. If possible, go for a card that will be reported on your credit report.
While changing your credit score may not happen within a day or month, it can still be changed, but one must change his/her spending habits. Changing your credit score might take up to year, but it is considered a great choice because it puts you in the right position to apply for loans, get that nice car and house without much stress.