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Tuesday 23 October 2018
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How to Build Your Credit in 5 Easy Steps

It doesn’t take much to damage a good credit rating. A late payment here or a missed payment there, and before you realize it, you will be dealing with a credit score that is below 600 which is dangerous. When you have a bad score, many doors are closed to you since you can’t qualify for loans or you are forced to settle for less customer-friendly terms that may cost you a lot of money.

However, the good news is that there are lots of things you can do to fix your damaged credit score. Rebuilding your credit score step-by-step will eventually pay off in future. Here are five easy steps that can help you restore your credit rating.
Check Your Credit Report

This is the first thing that you should do since it will help you understand where you are financially. It will also help you identify where you need to improve- whether you have lots of missed payments or your debt utilization is extremely high. These clues from your credit report will help you identify the crucial areas that you need to tackle first.

Keep in mind that you are entitled to a free report from each of the credit bureaus- one every year. You should also check your report for any fraudulent activities or errors which can bring your score down. If you discover that something is wrong is inaccurate in your report, dispute it and fix it as soon as possible.
Pay Your Bills on Time

Payment history accounts for at least 35 percent of your credit score, so it is essential that you make timely payments of bills every month. You should also remember the fact that late payments are reflected in your credit rating for up to seven years from the date that they occur. If your late payment isn’t due to financial hardships, make sure that you pay your bills as soon as you receive them. You can set up payment reminders to avoid late payments.
Obtain a Bad Credit Loan

Applying for a bad credit loan can also help you rebuild your credit history. Just like your other bills, you will be required to pay the loan on time to increase your chances of improving your score The purpose of a bad credit loan is to give you a second chance to prove how responsible you are about paying your debts. Borrow small amounts that you can pay on time to avoid further problems.
Pay Down Your Debt

Your credit utilization also plays an important role in raising or lowering your credit score. Credit utilization is a measure of how much debt you have. Your credit utilization is usually expressed as a fraction of the available credit that you are currently using. For instance, if your total credit availability is $10,000 and you are using $8,000 of it, then your debt utilization is 80 percent. Typically, if you are using a significant chunk of your available credit, it can cost you. Make sure that you cut your debt utilization to below 30 percent to start improving your credit score.
Use a Secured Credit Card

Although it may seem like a bad idea to use a credit card to improve your credit rating, the opposite is also true. In fact, one of the best ways of building your credit rating is through utilizing your credit card since it establishes a payment history. A secured credit card can help you improve your credit score until you qualify for a regular credit card. Pay your debt on time and avoid spending what you can’t afford to pay back and everything will be okay.

 




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