How to Fix Your Bad Credit

Fixing your bad credit score is important as this may make you may be unable to take out a loan or get a mortgage in the future. However, if you have already accumulated years of poor credit history, you should know that your bad score is not irreversible. Then, here is a guide to how you can reverse your score and ensure that you can look ahead to a bright financial future.

1.    Check Your Credit Score

With many people in debt, many people do not know whether they have bad credit or not. It is important to find this out, though, as this will allow you to know what steps you need to take to improve it. So, before you do anything else, you should check your credit score through credit reporting agencies. Head to Which? to find out how to check your credit score for free. Once you have done this, you will be able to judge how bad your credit is, and you will be able to track your credit score’s progress as you take steps to improve it.

2.    Dispute Your Score

However, you do not have to simply settle with the score that you have. For instance, you might want to dispute records of late payments and collection accounts, which might have been recorded due to administration errors or miscommunication between your loan providers. Many digital services and credit repair companies now allow you to do this in a few clicks of a button and, if successful, will allow you to improve your score without taking any more action.

3.    Be Savvy About What You Pay Off

The best way to improve your bad credit, though, is to pay off all of your outstanding debts and any bills that are keeping your credit score low, such as your outstanding credit card balance However, rather than simply choosing which ones to pay off at random, you should start by paying off those loans and bills with the highest interest rates and the newest accounts, as these will have a greater impact on your credit score than others. This means that you will not have to spenda lot of money that you do not have all at once. 

4.    Keep Open Old Accounts

Lastly, you should keep all of your old accounts open rather than consider opening new ones. When you have been paying the bills of credit cards for years and years, this reflects positively in your credit score. Conversely, if you suddenly close these accounts, you may find that your credit score is instantly affected, even if you then take action to correct it. So, even if you do not use your old accounts often, it is paramount that you pay off any debts connected to these and keep them open to ensure that your credit score is good.

5.    Be Wary In the Future

Although you might not be able to do anything about the mistakes that you have made in the past when it comes to your credit score, it is up to you to change your score in the future. This means that you should make sure that you pay off all of your bills and any debt repayments that you have on time, even if this means cutting back on your spending. By doing this, you will stop late payments from landing a strike against your credit score and that it does not worsen still, leaving you with an even poorer credit history to fix.

6.    Take Out a Short Term Loan

It might sound counter intuitive, but one way you can improve your credit score is to borrow money, and borrowing via a short term loan is an option that is open even to those with a poor credit history. It is very important to know that this only works if you make all of your repayments on time and in full. Short term loan broker CashLady states, “If you can make all of your repayments this will show that you can take out and pay back money and will allow lenders to see that you can be trusted to do so in the future. This could boost your credit score, especially if you have little credit history to your name, and will ensure that you can take out bigger loans with lower interest rates in the future”.

7.    Get a Secured Account

If you are struggling to get the loan that you need to be able to prove that you are financially savvy enough to handle debt repayments, you should consider getting a secured account. These accounts are secured against certain assets, such as a business or your home. Although they can be risky, as you can lose the asset in question if you do not pay them back, taking out a secured account can be a great way to build up your credit history even when you made payments late or got into debt in the past.

8.    Speak to an Advisor

Although this article can give you general tips, not every step will work for everybody. If you are struggling to take the steps that you need to improve your credit score, you should speak to a financial advisor, and if you are planning to take out a mortgage, a specialist mortgage advisor may be able to help you. These financial advisors can provide you with individualized advice that is based on your situation. This will allow you to minimize damage to your credit score both now and in the future and ensure that you can get your finances back on track.

Fixing your bad credit score is important, especially if you want to take out a mortgage or a loan in the future or even if you want to start up your own business. You should not let your previous mistakes when it comes to money affect your future. By following some of these tips, such as disputing your score and taking out a short-term loan, you will be able to gradually build your credit history back up and ensure that you can get the loans and funding options you need to have a bright financial future and have the independence you desire.