Good credit is key to financial peace of mind. Improving your credit score could get you lower interest rates, better terms, and make it easier for you to borrow money for loans that can help start or grow your business.
Of course, this all takes time. So start getting financial help and working towards improving your credit today, so you will have good credit tomorrow. Keep reading to learn five tips on living with and improving your bad credit
1. Get Financial Help by Reviewing Your Credit Reports
Transunion, Experian, and Equifax are all credit bureaus that are required to give you a free credit report once a year. All you have to do is ask for it.
You can also use resources like Credit Karma to get your free credit report. With resources like this, you will be able to see your credit scores and get information from your combined reports. That way you can see how to get your credit better so you can qualify for loans like ones through Bonsai Finance.
Dispute Negative Marks
When you’re reviewing your credit and you see any negative marks, you can dispute any errors online. You will want to make sure that you are fighting things like incorrect late payment entries or any other errors you see.
Credit mistakes happen like you mortgage lender could say you had a late payment when really it was on time. Or your credit card provider could’ve not entered a payment in properly.
Dispute any late payments, even if they are for closed accounts. Your payment history has a big influence on your credit score, so work hard to clean up any errors.
2. Decide If You Want to Play the Game
Some credit repair companies will play a game, and you can decide if you want to play or not. That game would be deciding to dispute accurate information as well.
For example, if an account went into a collection and you didn’t pay it, then the collection agency gave up. All there will be is the entry on your credit report. You can choose to dispute the entry.
A lot of people do this, and sometimes those entries get removed.
3. Increase Credit Limits
Another factor that has a big impact on your credit score is how you use your credit cards. The ratio of how much credit you have available makes a huge difference.
Usually, if you have a balance of more than fifty percent of your available credit score, that will impact your credit score negatively. Maxing out your credit cards also can really hurt your credit score.
A way that you can fix this ratio is to pay down your balances. And another thing you can do is increase your credit limit. So if you owe $2,500 on a car that has a $5,000 limit, and that limit gets increased to $7,500, then your ratio will instantly improve.
If you want to get your credit limit increased, just ask nicely. If you have a good payment history, most credit card companies will be happy to increase your credit limit. After all, the higher your balance the more money the credit card company makes.
You just want to make sure that you don’t actually use your extra available credit. If you use this credit then you will go back to having the same credit issues and then will get deeper in debt.
4. Open Another Credit Card Account
Another thing you can do to increase the utilization ratio of your credit card is to open up another new account. Just make sure you don’t carry out the balance on that car as well. Your available credit will increase immediately bu the limit of that card.
You will want to make sure your credit card won’t charge you an annual fee. Your best bet for this is to get your additional card with a bank that you already have an account with.
Usually, cards that don’t have an annual fee tend to charge higher interest rates. But these interest rates shouldn’t matter if you carry out a balance.
Just make sure you act smart with a new card. The goal of another credit card isn’t to get you more cash, it’s to simply improve your credit score. If you’re worried that you will run up a high balance with a new credit card, then don’t open up a new account.
Keep Your “Old” Credit Cards
If you’re not using a credit card, or you were able to pay it off, you might think you can throw away that card. This is actually wrong. The age of your credit history has a small but meaningful impact on your credit score.
So let say you’ve had a certain credit card for over ten years. If you close this account you will decrease your overall credit history, which will impact your score negatively, especially over the short term.
So if you want to increase your credit score, but you also want to get rid of a credit card account, it’s actually best to get rid of your newest card.
5. Pay Every Bill on Time
Even just one late payment can really hurt your credit score. So you will want to do everything that you can from this day on to pay your bills on time.
If one month you are not able to pay all of your bills on time, then you will want to be smart about which bills you are paying late. Your credit card provider and mortgage lender will report late payments to credit bureaus. On the other hand, your cell phone and utility provider likely will not report a late payment.
You should check the accounts part of your credit reports. Here you can see which accounts are listed. If you have to pay late, pick the account that doesn’t appear on your report.
Now, work as hard as you can to make sure that you pay all your bills on time. Your stress level and credit score will thank you, and soon so will your bank account.
Work Towards Better Credit Today
Now that you know what you can do to improve your credit, take these steps today. These financial help tips can really improve your credit score. For more financial resources, keep browsing our blog!