The measurement of your financial health and creditworthiness is what constitutes your credit score. Therefore, your credit score is an important part of your identity so, it is best to ensure your one is good. It can be challenging and costly to get rid of the bad credit but it will definitely make your financial life easier. So, if you are wondering how to improve your credit score, here is a look at how you can do it..
Check Your Credit Report for Errors
The credit score that you have is based on information that various companies report to credit bureaus. So the first step of getting rid of bad credit is by requesting to see the report. The information will give you an idea of where you stand. Once you get the report, go through it to ensure that there are no mistakes. To do this, you have to review;
• Personal data- Look into the information listed in the account, like your name and address.
• Account data- Find out the information in the account like the credit limits, payment history, balances, and current status of the accounts.
• Collection information-It is also vital for you to find out information about the account, like if the account is past due or if the collection agencies have the account.
You need to review all the information to make sure they are accurate. If you find any errors in your report, you should dispute the information as soon as possible. Fortunately, you do not have to visit the credit bureau offices to clear your credit. Instead, you can do this online or through the mail. The dispute will take 45 days or less for the credit bureau to investigate the claim and rectify the report.
Figure Out Why You Have Bad Credit
If there is no error in your report, you need to figure out why you have bad credit. The best way to do this is by understanding the reasons that might lead to bad credit. Here are common causes of bad credit ratings.
• Not sticking to credit agreement- If you make a late payment, miss a payment, or pay less than needed, all this information will reflect on your credit history. Thus, it will hurt your credit score.
• Declaring Bankruptcy- When you declare yourself bankrupt, this will have a huge impact on your credit ratings.
• Using the wrong credit card- You need to use a credit card that will fit your situation. Ensure that the credit card limit, interest rate, and fees will help you stay on top of your repayments.
• Being the subject of a County Court Judgment (CCJ) – If you do not make your payments on time, you might be a part of the CCJ. However, if you gate a CCJ document, you have one month to pay off the debt. If not, then the CCJ will affect your credit ratings for six years.
• Identity theft- You might be surprised at the high rates of identity theft. If you notice any strange credit card usage, report the information to your bank and cancel the credit card immediately.
Work On the Problem Areas
Different people have different issues that cause them to have bad credit card scores. That being the case, you need to understand why you had a bad credit score and work on the issue. Here are some of the ways that you can improve your credit score.
• Check your credit report regularly to ensure the information is correct
• Make your credit payments on time
• Stay within your credit limit
• Avoid taking cash on your credit card
• Keep track of all your account
• Pay any Country Court Judgments balances or defaults
Build Smart Financial Habits
Having good financial habits is vital if you want to get rid of bad credit fast. Without the right financial habits, you will have a hard time improving your credit information. Here are some of the ways that you can use to improve your credit score.
• Review and update your financial plan regularly- You need to have a plan for your money to improve your credit fast. So make sure you are always updating and reviewing your plan.
• Set financial goals- Another option you can use to help you improve your had credit is setting financial goals. However, when setting financial goals, you should make sure that they are achievable and relevant.
• Create a budget- Having a budget is one of the vital financial habits you should have. It is important to understand the money getting in and out of your account. That will help ensure that you do not spend more than you make.
Do Not Get Another Loan.
When you are in debt, the chances are that you might feel tempted to get another loan to help you deal with your financial crises. Taking a new loan many increase your financial limit, but it hurts your credit score if you apply for several accounts within a short duration. The best way to deal with this is to avoid getting another loan altogether.