Did you know that with bad credit you are :-
- Likely to pay more for car insurance as you will be charged a higher interest rate
- Get worse deals on cars or other finance deals loans than someone with good credit
- Struggle to get a mortgage or in some case rent a house
- Negatively impact your ability to get a good finance deal on a car if at all. People with bad credit tend to be offered sub prime deals which are expensive finance options for basic cars
- Run the risk of not getting a job or being able to start a business some companies will look at your ability to manage your finances to assess your level of responsibility.
In short having bad credit in a world driven by credit is bad news. It is important to check your credit score regularly your score is like a report card for adults.
Here are 10 quick tips to help raise your credit score
1. Monitor your Credit
Check your credit score regularly there are many agencies that can tell you what your credit score is and give you a report. As this is a basis of all the credit decisions in your life its worth keeping an eye on. There are many free ways to keep an eye on your credit score such as noddle and checkmyfile. Experian and Equifax do have charged services but even the monthly fee is worth it.
2. Build a good Credit history
As in the title lenders like to know your history of borrowing so anyone that says they can legally fix your credit overnight is lying. Credit scores are based on your lending over time. The good news is your most recent activity is whats taken into consideration the most. So if you have bad credit you need to take action now and start getting it right. If you do the right things you will see a difference in a year.
3. Pay your bills on time
The most important influence on your credit score is your ability to pay bills on time. It is essential you never miss payments or let any of your accounts go into collection those are frowned upon by lenders. It is that simple if you have a credit card make sure you pay your statement if you can pay the full balance each month that’s even better.
4. Bad credit cannot be erased
If you get detrimental information on your credit report it can stay for up to ten years . The best thing to do is not get any in the first place. Late payments can be on your report for 7 years, bankruptcies can be up to ten years.
5. Use your credit card the right way
Some people think that credits cards are evil and the scourge of the earth. However if you use your credit card correctly they are an effective tool to help you build credit.. They give a lender a good idea of how you are responsible as payer. It is important to use your credit card to show your ability to pay of credit. The best way to manage a credit card is to avoid interest charges by paying your full balance every month as previously suggested.
6. Keep within your credit limit
Although using a credit card is good there still rules to adhere to ensure it builds your credit score. The common rule is to keep within a 30% Credit utilization limit which means if you have credit amounts of 10k do not spend over 3k on your cards. This a major consideration to lenders so keep your ration LOW!!!!
7. Use a credit builder card
If you are struggling to get a credit card then there is an option of a credit builder cards the rates and limits are not as good as credit cards, but are a way of building credit if you cant get access to a credit card. Most lenders provide a credit builder option. As with credit cards use these strategically to build credit and not to just spend spend spend.
8. Use a loan to build credit
Another good way of building credit is to have a loan or mortgage again this demonstrates your ability to pay of credit consistently and reliable. Again we would advise to keep your credit ratios loan and don’t borrow just for the sake of it without having the ability to repay it back.
9. Learn to use credit strategically
Without a credit history you cant build up your credit score . They key to building is to use credit accounts but use them in moderation and abide by the rules discussed in this blog. Building up a good history of credit will go a long way to getting a good credit score and keeping your lines of credit open.. It is worth showing signs of activity on any credit card you have to help build your history. Try not to close any cards you have.
10. Understand how credit works
When you understand how the credit scoring system works and use credit strategically, you’ll build excellent credit that will improve many aspects of your personal finances.