Your credit score affects so many different aspects of your life and if you have a bad score, it can cause you a lot of trouble. You’ll struggle to borrow money, get finance on a car, and even rent somewhere to live.
The problem is, once your credit score is already damaged, it’s very hard to come back from. But don’t worry, there are ways that you can repair your credit score. These are the best ways to do it.
Check That It’s Correct
Before you start looking for ways to fix a low credit score, you should double check that it’s correct in the first place. Sometimes, the companies that generate your credit report may make mistakes, there might be missed payments on there that you didn’t miss, for example. If you can identify these mistakes and get them fixed, your credit score might jump up straight away. Before you do anything else, you should check your credit score and look through every entry on the report.
If there are mistakes, you need to get in touch with the credit score company and ask them to rectify it. Obviously, you’re going to need some proof that the mistakes are there, otherwise, everybody would just call up claiming that there is a mistake and their credit score shouldn’t be so low. That means you’ll need bank statements to prove that you didn’t miss payments. If you can get those mistakes fixed, it’ll be a lot easier to repair your credit score.
Borrowing Sensibly
If you’re going to improve your credit score, you need to prove that you can borrow sensibly and pay it back on time. This can be tough because there are not that many lenders that are willing to give you a loan because you have bad credit. But there are some companies out there like CreditLoan that deal specifically with people that have poor credit.
If you take out a small loan and then make the repayments on time each month, you’ll start to build your score up again. Just make sure that you can actually afford to repay the loan before you take it out because missed payments will just make your situation worse.
Minimize Credit Utilization
When you pay off a credit card, it seems like the sensible thing to do is to just cancel it so you’re not tempted to get into more debt, but that’s not the best course of action if you’re trying to boost your credit score. Credit utilization refers to the amount of available credit you have and how much of it you’re using. Low credit utilization has a positive impact on your score so if you’ve got a credit card with money available, but you aren’t using it, that’s better for you than not having a card at all.
Fixing your credit score will take a bit of time because you need to rebuild that trust with lenders, but if you follow these steps, it is possible to come back from a bad situation.