Have you ever been in the embarrassing position of being declined credit? Standing in front of the cashier when they tell you that your application has been declined. If you have, then the chances are that you have never applied for any type of credit again, hoping that your score will improve if you leave it be.
Unfortunately, this just isn’t the case.
If you find yourself with a bad credit score and rating, below are some tips to help.
Stop Wasting Your Money on Small Payments
If you are just paying the minimum balances on each of your cards every month then you aren’t getting anywhere. The reason is that these are exactly how they sound, minimum payments. This is barely the interest and maybe a few dollars of the debt itself.
If you have multiple debts across a few loans and store cards, consider a debt consolidation loan. This type of loan consolidates all of your smaller debt into one larger debt with a single recurring payment. This not only helps to reduce your debt quicker, it also improves the likelihood that you will stick with your payments as you will be able to watch a manageable amount reduce.
Pay Your Bills on Time
Each time that you pay a bill late, it affects your credit score. Each time that you miss a payment entirely, it affects your credit score. Everything you do and don’t do with your finances can affect your credit score.
With This in mind, consider switching your bills and services to direct debits. Apportion out how much you expect them to cost for the year, over the month, and set up an account which you deposit this money and only use the account for direct debits. This will help to ensure that your payments stay on track and your credit score doesn’t get worse.
Create a Realistic Budget
The worst thing that you can do is to create a budget which simply isn’t viable. Instead, include money for entertainment and take advantage of sites like the Groupon Coupons for Motel 6 to keep your entertainment and vacation costs down.
By having an allocation of funds purely for entertainment and vacation, it lessens the chances that you will dip into your savings when you are at home and feel bored or see an item which you simply have to have.
Stop Spending Money!
Last, but certainly not least, is the tip to stop spending money! Whatever you need to do to stop spending money, do it! Spending money is the very reason you are in debt, and the only way to get out is to stop the cycle. Cut up your cards, put your money in the freezer, whatever you need to do, do it!
Repairing your credit score isn’t something which you can do overnight, but by following the above tips you can see an improvement in its rating and your creditworthiness. If you are concerned about your score, be sure to obtain a copy of your credit report to ensure all of the details are correct and your score reflects only your own financial history.