You really don’t have to live with bad credit for the rest of your life. If you’ve been frustrated by rejections from banks, lending agencies, or credit card companies, check out a few of these financially-feasible ways of improving your credit score.
Tip #1: Clear That Credit Card Debt
Probably the biggest way to improve your credit score is to get rid of credit card debt. Like a big ugly blemish on your pristine (or not so) credit history, credit card debt looms large over your financial future.
Unfortunately, credit card companies often charge outrageous interest rates. This makes it nearly impossible to get out of debt once you’ve slipped down that slope. So how do you pay the debt off? A great option is to take out an online personal loan. Taking care of the entire issue in one swift payment, an unsecured loan allows you to consolidate all of your debts into one easier-to-manage monthly payment. Better yet, personal loans often have lower interest rates than credit cards, which gives you a realistic chance to pay your debts off gradually and improve your credit score.
Tip #2: Be on Time
Credit checkers like to see that you pay what you owe on time. A good way to show them this is to start paying your current bills in a timely fashion. While it may be hard at first, once you make a routine of it and set a budget, it’ll get a lot easier. Set up a monthly payment schedule, and if you can, set up autopay, so you never miss a payment again. It’s easier to pay on time if you have only one payment to make per month, which is another benefit of consolidating via a personal loan.
Tip #3: Take Out a Line of Credit to Pay Back Responsibly
While this may seem counterintuitive, using your credit is actually a great method for improving your credit. Think of it like this. In order to build a level of trust, you have to be in a relationship that tests that trust. In the same vein, if you never use credit, you’ll never be able to prove your trustworthiness in paying it back.
The trouble is that many banks won’t lend to someone with bad or low credit. It’s a catch-22 that many people struggle with. To remedy this, you can turn to a third-party lender to get more flexible terms. Start with a small unsecured loan, pay it back responsibly, and build your credit from there. And just FYI, this is why it’s a good idea to leave paid-off credit on your report. It shows that you’ve responsibly paid off debt or credit that you took out previously.
Tip #4: Consolidate Credit Card Spending
We mentioned taking out an online personal loan to consolidate debt and help get you out of financial gridlock. Using only one credit card is another way to clean up your credit history. Aside from being just plain confusing to keep track of various monthly payments, interest rates, and surcharges, having multiple credit charges on your report doesn’t look good to lenders. It makes them think you’re not financially capable of paying off one card responsibly, so you’re just repeatedly shifting the debt from one place over to another. Keep credit card spending to a minimum number of cards, and you’ll look better on your credit reports.
With a solid online loan, good budgeting, and smart monthly payments, you can have your credit score on an upward trajectory in no time.