A bad credit score can make life more difficult. It can be harder to get approved for a loan or mortgage if you have a low credit score. A low score can also make it harder for you to get an apartment or job. However, bad credit is not the end of the world. There are many steps that you can take to rectify this problem.
Look at Your Credit Report
The first step that you will need to take towards improving your credit score is to review your credit history. You can visit annualcreditreport.org to get a copy of your credit report. Keep in mind that you can get one free credit report every year. You will need to verify your name, address, social security number, and birth date to get a copy of your credit report. Once you have your credit report, you will need to review it carefully. Many people have a low credit score due to erroneous information. Contact the credit bureaus as soon as possible if you have any errors on your report.
Use Payment Reminders
Paying all of your bills by their due dates is one of the keys to improving personal finances. This is true whether it’s car notes, personal loans for bad credit, or the monthly utilities. In many cases, this will also help to boost your credit score. It is a good idea to use payment reminders if you find yourself forgetting when your bills are due. You can also set up automatic payment drafts every month.
Keep Your Credit Card Balances Low
It is okay for you to use your credit card to make purchases. However, you want to get into the habit of paying them off every month. If you cannot pay the full balance, then it is a good idea to pay as much as you can. You should keep your credit utilization ratio below 30 percent. For example, if your total credit limit is $12,000, then you want to keep your balance under $4,000.
Get a Secured Credit Card
A secured credit card can help you rebuild your credit. You will have to make a deposit on your credit card before you will be able to use it. Your credit limit will likely be equivalent to the deposit that you make. For example, you make a $500 deposit. Your credit limit will be $500. Credit card companies send positive reports to the credit bureaus every time that you make a payment on time. Your credit card company may raise your credit limit after you make a few payments on time.
Build up an Emergency Fund
Many people take out loans and use their credit cards during a financial crisis. The best way to prepare for a financial emergency is to build up an emergency fund. Put aside some money every time that you get paid. The goal should be to have at least three months worth of expenses in your savings account.
A bad credit score does not have to ruin your life. You can improve it in several months. You will have to get a copy of your credit report and review it for errors. You will also need to use payment reminders and keep your card balance low. Additionally, you can get a secured credit card and build an emergency fund.