Having bad credit can negatively affect an individual in a variety of ways. Everything from buying a car to purchasing a home can be impacted by a credit score. Some employers even check an applicant’s credit history as part of the hiring process. Unfortunately, it’s easy to overspend, miss payments, and fall into bad credit. The following are five tips for repairing bad credit.
1. Get a Copy of Your Credit Report
Many people may not even know what their credit score is and where they stand regarding their own credit. Once the credit report is obtained it needs to be read through completely and any errors on the report should be corrected as soon as possible. It’s estimated that more than half of all credit reports have mistakes on them. If you need help disputing any errors on your credit report, you can use a credit repair company such as Sky Blue Credit to assist you.
2. Make Sure all Payments are on Time
Making car, rent, and all other payments in a timely manner every month is probably the biggest factor when determining a credit score. If this has been a problem in the past, it’s time to make it a priority. If there is a legitimate reason why a payment will be late, call the creditor and explain the situation. They may be willing to give you a grace period.
3. Establish a Positive Relationship With a Bank
Having an established bank account with a reputable financial institution in an important part of building good credit. Try to open both a checking and savings account and make regular deposits. Once there is an adequate amount of savings built up ask to take out a small loan using the savings as collateral. Pay the loan back as promptly as possible. This will become part of a positive credit history.
4. Don’t Close Any Credit Cards
A credit score is affected by the credit to debt ratio. If an individual has a lot of debt, closing cards will lessen the amount of credit that is actually available and create a higher debt ratio. If it comes to the point that an account must be closed, it’s important that the credit card that is the oldest remain open. Accounts that have been open for several years will show that a person can maintain credit for a long period of time.
5. Pay Down Credit Cards
Even though it isn’t recommended to close any accounts it’s a good idea to pay down each credit card as much as possible. Paying even a little bit extra each month can make a difference. A large amount of money can be saved over time in reduced interest by paying down high credit card balances.
Following these five tips can go a long way in repairing bad credit. It may take a few years to see the results but improving a credit score will be worth it.