If you have taken the time to find out what your credit score is, and you have been shocked and worried to find you have a poor rating, you may be feeling at a bit of a loss regarding what to do now. A lot of people think they are going to be stuck with a poor score forever, but this is not the case. In fact, your credit score can change every few days, so the sooner you take some action, the better. With that being said, read on to discover the three steps to take if you have a bad credit score.
Put a debt repayment plan together – The first step is to put together a realistic and effective plan. Don’t shoot yourself in the foot by putting together a plan that is over-ambitious. Just keep things simple and accurate. You need to detail the money that you have coming in and out of your account every month. Make sure that every expense, no matter how big or small, is included. Once you have done this, you will then see where it is possible for you to make savings and cutbacks. Then, once you have got your bills down to the lowest possible level, you can determine how much you can comfortably afford to put towards paying off your debts every month. You will then see when you can achieve a debt-free life too and this will give you something to work towards.
Consider using borrowing as a tool to improve your rating – This is a suggestion presented with caution, as it does not suit everyone. Nevertheless, if the reason why your rating is bad is because you actually have never owned a credit card and, therefore, you have no credit history, this is an option that will work for you. You can get car finance loans, for example, which will help you to build your rating. This is a good way to finance your next vehicle while also helping you to improve your credit score.
Understand how your credit score works – The last suggestion that is required when it comes to improving your credit score and knowing how to manage your money better is actually understanding how your credit score works. What factors have an influence on your rating? If you do not understand your credit score, how are you going to improve it and maintain it? It’s not just about paying your debts off on-time. It is also about your credit percentage use, as well as the credit applications you make.
So there you have it: the clear steps that you need to take if you have a poor credit rating. If your credit score is very poor, poor, or fair, make sure you follow the tips that have been provided so you can make sure your score is upgraded to either good or excellent. Once you do this, you will be eligible for a much greater number of financial products and you will be offered better rates too.