Life happens, and sometimes financial hardships result in ending up with a less than stellar credit score. Living with poor credit can be frustrating and can limit your options on many fronts. You may find it hard to take on any new credit, fail to qualify for a mortgage, or have a tough time finding a rental unit.
Taking out a loan with poor credit often means that you will be subject to sky-high interest rates, making it harder to make your payments. If you have a FICO score under 650, you may think it is impossible to bring it back up.
The good news is that there are a few things that you can do to help repair and boost your credit score. From taking out a micro loan from a Canadian Fintech lender to paying your bills on time through automatic withdrawals, let’s look at a few ways that you can work towards improving your credit score.
REVIEW YOUR CREDIT REPORT
Your first step towards repairing your credit score is to obtain a copy of your credit report. Your credit report will show you a listing of all past debts, current balances, repossessions, and collections actions on your account. It’s essential to do a thorough review of all your accounts listed on your report. It’s not uncommon to find errors or entries that should have been removed when the debt was resolved. These types of mistakes can keep your score low and need to be resolved. Write to the credit bureau to dispute any errors that you find on your report.
PAY BILLS ON TIME
Your credit score is tabulated based on your payment history for all debts, including phone bills, utility bills, and mortgage payments. If you want to improve your credit score, it’s vital to start paying your bills on time. The easiest way to stay on track with your bill payments is to have them automated. Make arrangements with your bank and your creditors to have your monthly payments automatically taken out of your account so that you will never be late again.
If you find it hard to make your monthly bill payments, one way to make things easier is to pay down your balance bi-weekly. Split your total payment into two smaller, more manageable installments that will keep you on track.
PAY DOWN DEBT
The most effective way to improve your credit score is to start paying down your debt. Your debt to credit ratio has a significant impact on your overall credit score. If you are only paying the minimum payment on your debts, it is challenging to start reducing your principal amount and will keep your credit score low. Talk to your bank or lenders about consolidating your debts into one manageable payment to help you take care of your debts faster.
One of the challenges of having poor credit is that it limits your opportunities to qualify for additional credit. Without the chance to prove your reliability, it can be impossible to make a dent in your credit score. One way to get positive listings on your credit report is to take out a series of micro-loans. These higher-interest short-term loans can help you establish a responsible pattern that will start to boost your credit score.
Living with poor credit can result in having limits on how you want to live your life. If your credit score is low, try some of these smart money tips to help you repair your credit score for a more promising future.