There are 5 common ways to fix your bad credit. Although some people may not be aware of them, these methods are nothing new and have been around for quite some time. The following is a list of the 5 best ways to fix your bad credit:
- Make payments on time
- Increase available credit
- Choose 1 credit card to focus on.
- Pick one thing you can live without.
- Stop using credit.
Why you should make your credit card payments on time
There are many lenders (auto, mortgage, and credit card companies) who access your credit history before making a financial decision on your behalf. One category that always looks good is your payment history, because it shows the lender how responsible you are for making your payments and making it on time. The good news is, if you’ve missed a payment here and there, it’s not a big deal, but if you don’t make the payments a few cycles in a row, that’s not good. It’s like when you’re interviewing for a job and they call your last employer and find out that you were quite late. On the other hand, if you are late for work once every 2 months, it will not be mentioned. Same capital to make payments on time with your credit cards.
Also, when you don’t make a payment, you are subject to some problems with the credit card companies. First, your credit card will attach a late payment fee and, in some cases, may give you a penalty interest rate. As if your life wasn’t hard enough, obviously a lot happens if you don’t make a payment. Then they add insult to injury with this punishment. In addition, you are subject to a universal default where other credit cards can legally penalize you for not making a payment on a totally different card. This is not a bad choice and only the witnesses discover the setting, everyone finds out.
Why you need to increase your available credit
Your goal is to get out of debt and fix your credit score. You can start working toward this by increasing your available credit. The amount of available credit is what causes many people to have bad credit scores. They have literally used up more than 70% of your available credit (for example, your credit limit is $ 2,000 and you have $ 200 available). This hurts your score so much because it shows lenders and / or credit card companies that you don’t have enough cash and you need to trust your credit card use. So if you pay off your balance and your available credit increases, you’re sending a different message to credit card companies. Eventually your available credit increases in 2 ways: by paying off the balance and companies will generally extend your line of credit as you pay off your balance and based on how long you’ve had the credit line.
Why you should choose 1 credit card to focus on
It happens all the time, people get motivated and do drastic things that are not useful in the long run. For example, you commit to losing weight and exercise for 2 hours the first 2 days, but by day 3 you are sore and exhausted, so you stop exercising. This happens with the payment of credit cards. People get extra money and instead of paying 1 card, they make payments with 3 credit cards. Although they reduce the balance of all of them at the end of the day, they still have 3 credit cards instead of the 2 that they would have by focusing on 1 card at a time.
Why should you choose 1 thing you can give life without
Getting out of debt is about sacrifices and not wasting money. Some people have to keep up with the latest trends and go into even more debt. I did it too and then it hit me with the iPhone 6s plus. I was buying new iPhone after new and then realized that I don’t have 1 iPhone that is not in perfect condition. Everyone can play the same games, show the same apps, etc. which is why I am wasting money buying a new iPhone at each launch. I will not buy the iPhone 7!
Another example is coffee, I learned that kcups are not cheap, they are just quick and convenient. I also learned that $ 2.50 for a venti at Starbucks every day is $ 14.00 and a 32oz bag of Starbucks Dark Roast costs 17.00 at BJs. Before I found out about the BJs, I was paying 2.50, but I thought I was doing fine because I was using my cash back debit card! However, the Bjs bag is much cheaper.
Why you should stop using credit cards
I greatly increased my credit score (FICO score) a few years ago simply by not using my credit cards for a few months. I recently blogged about it because it was around this time a few years ago that I noticed the huge increase in my credit score, I finally joined the 700 club! Plus, the interest on credit cards, even if it’s low, is ridiculous. In my state we complain all the time about taxes on products, well, interest rates on credit cards are a little higher than taxes. Lastly, if you don’t pay off full balances at the end of promotional periods, your balance nearly doubles.
Bonus # 6 Hire a credit repair agency
Here’s a bonus: The number 6 way to repair bad credit is to hire a credit repair agency. By law, you are entitled to a free consultation from credit repair agencies. According to the Federal Trade Commission (FTC), the Credit Repair Organizations Act requires consumers of credit repair services to receive a copy of their legal rights and protects customers from being charged before they are paid. services. The resources on this page will explain this law in more detail.
In closing, using the methods listed above will definitely help improve anyone’s credit rating. Making credit card payments on time, increasing available credit, choosing 1 credit card to focus on, choosing 1 thing you can live without and not using credit cards are the most commonly used ways to correct bad credit. . When in doubt, contact a credit repair agency and make sure you understand the terms they agree to.
