If you have poor credit, which is characterized as anything below 700, you’ll have a difficult time financially. Not only will it be hard to get a loan, but you’ll also likely spend more on things like rent and insurance premiums and rent.
The good news is you don’t have to live with poor credit forever. There are several ways you can repair your credit and gain back some independence.
- Check Your Credit Report Regularly
Keep an eye on your score. You’ll be able to assess your credit situation as well as identify any errors that may have been made in your report.
Many people don’t realize that there can be mistakes on your credit report, and if you notice unrecognizable outstanding balances or other infringements dragging your credit down, you can file a dispute. You might want to seek the help of a qualified credit repair organization to speed up this process.
- Lower Credit Card Balance
The amount of debt you currently have will directly affect your credit score. Reducing your debt in total is a great way to improve credit. Start by reducing a balance on your credit card, as this will have the largest impact. Credit cards tend to have higher interest rates and strict repayment terms, and the faster you can reduce this debt, the better off you’ll be.
Additionally, cut up your credit cards to avoid the temptation of putting more on your balance. It’s too tempting to have “free” money with the swipe of a card. If you can’t control your spending, remove the temptation altogether.
- Automate Payments
The best way to improve your credit score over time is to establish a pattern of paying your debts on time.
Other than lack of financial stability, we really have no excuse for forgetting to make payments in today’s technologically run world. With online banking, you can set up automated payments for anything including your utilities, car payment, mortgage, rent, or any other service that can be directly linked to Bill Pay.
If you have payments that can’t be administered online, set up reminders on your phone or desktop calendar. You’ll receive an alert every time a payment deadline nears so you won’t forget.
- File for Bankruptcy
Though this will trash your credit, it’s better to file for bankruptcy sooner rather than later if it’s inevitable. Prolonging your inability to pay off debts will steadily drag down your credit score and make it more difficult to surface again.
If there’s no escaping bankruptcy, file quickly, and begin again from scratch. You’ll start with a cleaner slate and be able to establish new habits of avoiding debt and making payments on time. It will take several years, but your credit can be good again with a little discipline and cautious spending.