Having bad credit can do more then prevent you from getting approved for a loan; you may also have to pay more for insurance and provide a security deposit for utilities if you move.  Financial challenges can occur to anyone, anytime.  The good news is you can begin to improve your credit immediately.  It takes time but it’s possible to improve it as long as you’re dedicated to developing positive financial habits.

Pay your bills on time – this is one of the easiest ways to build your credit score and more importantly build great financial habits.

  • create a budget – calculate income, add-up expenses; this will give you a clearer picture of your financial state
  • reduce non-essential expenses -small cuts will help you save, pay down debt and live within your means
  • track your spending -tracking helps you stick to a budget, write expenses down in a notebook or input in an app
  • get current on accounts that are past due -contact creditor to find out how to get current on the account

Review your credit score history- you’re legally entitled to a free credit report.  Reviewing your credit periodically allows you to see if there is information that may negatively impact your score

  • look for incorrect information
  • be aware of accounts that are past due – late payments
  • dispute inaccurate or incomplete information – create a paper trail

Pay down your debts – try to pay it off; if that’s not possible, pay it down to as low as you can

  • reduce your debt-to-income ratio – the lower your ratio, the more likely you’ll qualify for a good loan
  • increase your available credit

Use credit wisely – once your have credit it’s important to use it responsibly’dondon’t

  • don’t open new accounts, unless you have to – this raises red flags for lenders
  • keep a low balance on credit cards
  • pay off debt instead of moving it to another account or to  new account

The good news is that in most cases, nothing lasts forever.  The older the incident, the smaller the impact it has on your overall credit score.  However, the specific length of time depends on the credit bureau.  For example a bankruptcy may stay on your credit report a certain degree of time.

 

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