Four-step Process to Improving Bad Credit

If you have bad credit, you probably already understand the extent of what this blunder can do to your finances. Applying for personal loans or mobile phone contracts, for instance, will prove to be more challenging. Approval is going to be more elusive considering that bad credit implies that you were not a responsible borrower at one time or another.

The only way to get around this problem eventually is to deliberately take action that will improve our credit score over time. If you’re ready to take an offensive move against your poor credit rating, here’s a five-step process to guide you through:

1. Check Your Credit Report

Before you go ahead and put your extensive credit repair plan rolling, one of the first things you must do first is to check your credit report. After all, you wouldn’t know the extent of the problem unless you start from the root cause. To get started, you can request for a free credit report at http://www.experian.com/assistance/free-annual-credit-report.html.

The goal is to double check your history for any inaccuracies. It’s tough enough paying for your financial blunders. You don’t want to make it worse by failing to check mistakes done by others. As soon as you have obtained your free credit report, look for any errors and report it to respective credit card agencies as soon as possible.

2. Strive to Pay Your Dues on Time

In case you don’t know it yet, your payment history comprises 35% of your credit score. As soon as you’re sure that your credit report accurately reflects your debts and payment history, the next step to fixing your poor credit rating is to make sure that you pay all your dues on time starting today.

Make it easier on your part by setting up payment reminders. This way you won’t have to miss any due dates. You can also set up automatic debit payments through your bank accounts or credit cards so you won’t have to worry about anything. Just make sure your accounts have sufficient funds to avoid complications later on.

3. Aim to Reduce the Amount of Debt You Owe

Other than paying your dues on time, one of the best ways to improve your credit score is to aim to reduce the amount of debt you owe. While this part may take a toll on your finances, this is something you should have taken care of a long time ago. Make it work by devising an extensive debt payment plan to reduce your debt starting with the ones that have the highest interest rate.

4. Avoid Using Credit Card for the Moment

When you’re in the process of revamping your credit score, you’d want to refrain from using your credit cards for a while. This is another way to reduce the amount of total debt you owe. Since you’re not incurring debt through your credit cards, you avoid paying the interest rate. You can also now focus most of your efforts and energy on improving your credit score. At the end of the day, it’s all about living within or even below your means that will help boost your credit score for the better.