Improving credit score when it is low is not something that is as easy as some might want you to think. In fact, you should never trust any article that tells you otherwise. When your credit score is low you can only really opt for the loan with a bad credit option. However, the good news is you can improve your credit score, no matter how bad the current situation is. This is what we will discuss below, highlighting some simple tips that will help you to get in a better situation.
Always Check Credit Reports
If you want to repair your credit score or simply improve it, you need to get the credit report first. Free copies can be obtained. The idea is that you need to look at the entries so you check for errors. Inside this report, you see all data utilized to calculate the score and there are always possibilities that errors exist.
Make sure that you check for incorrectly listed late payments entries, together with amounts that are owed for open accounts. This should be correct. When errors are found, dispute them and your credit score will quickly go up. The same goes even when you receive extra unexpected money, like after a workers compensation lawyer helped you deal with a work-related injury.
Set Payment Reminders
One of the biggest factors that contribute to credit score is making credit payments right on time. There are banks that will give you payment reminders through banking portals, usually through the internet. They will send a text message or an email to let you know that a payment is due. However, this is not the case with all banks. If you do not have a payment reminder you can lower your credit score simply because you pay on time.
Alternatively, consider having payments debited automatically from the bank account. Just remember that this will only make minimum payments. This does not help improve credit score as you actually making the payments without automatic payments.
Reduce How Much Debt You Have
Obviously, this will not be easy. However, if you do reduce how much you owe you are going to improve the credit score. The very first thing you should do is to stop using the credit cards. The credit report can easily offer you a list of the accounts that you have. Go and check the amounts that are owed for all accounts. Then, analyze interest rates.
What you want to do is create a payment plan that is going to plan repayments based on your budget that can be used for debt payment. Try to first pay those credit cards that have the highest interest rates. As you do this, be sure that minimum payments are maintained for the other accounts.
Always stay calm, no matter how low your credit score is. There are ways to increase the credit score and you can get back to really good standing. If you make decisions in a hurry, mistakes happen. Whenever needed, hire a financial advisor that can give you advice about what you can do in order to get back to a good financial standing.