Don’t Let Bad Credit Stay that Way! It’s Easier to Fix than You Think
Credit scores are tricky little things. Financial institutions use this number to decide whether to lend you money or not. If yours is on the low side or nonexistent, then you may have to pay more or make do without the extra money that you need. Don’t let bad credit stay that way. It’s easier to fix than you think.
Get Rid of Bad Credit by Fixing It
NBC News reports that you can build and repair bad credit by paying your rent. If a lender is questioning your credit worthiness, you can now prove your dependability with on time rent payments. Companies like Credit Rent Boost help consumers who are attempting to create or improve a credit score by reporting rent history to the credit bureaus.
Sarah Roberts, a Credit Rent Boost partner, said, “For 12 months at the same residence, we charge $35, and if a property manager signs up his entire complex, then we give everyone the current year free.” She also pointed out that her company can report up to two full previous years, ones verifying that the renter paid on time. Timely rent payments increase a credit score by an average of 35 points. But, this type of reporting can up it by more than 100 points depending on the circumstances.
The Right Nest Egg Can Build Your Credit
If your credit history is in need of some TLC, then consider turning to a company like Self Lender. James Garvey, the company’s founder and CEO, said that when you set up an account with the company you’ll have a “savings plan that builds credit.” The process is like having a secured line of credit through a traditional financial institution, but with Self Lender, you’ll provide less money up front. The company charges $12 to set up the account, and members pay monthly payments of $48.50 for one year.
You’re not allowed to take the funds out while you’re depositing them, but once the year has passed, you’ll have $550 plus 55 cents in interest. You’ll also have created a credit history with the three main credit bureaus. Garvey claims that those who are starting to build a credit score from scratch through Self Lender will establish one that’s around 650 as long as they pay the full payment amount on time.
Don’t Close Your Credit Card Accounts
When you’re at a department store and the clerk asks you if you want to open a credit card account with the store to save a percentage on your purchase, consider your answer carefully because once you have an open credit card account, it’s best to avoid closing it. WiseBread reports that keeping these accounts open extends the length of your credit history, and this can make your score higher. Older accounts ensure that you have a substantial credit history.
If you need to build credit or establish a credit history, then open a secured credit card account. Without a solid credit history, it’s almost impossible to get a regular credit card, but most people can qualify for a secured account since they use their own funds to secure the credit limit. The good thing about this type of account is that the company will report your payment history, allowing you to build credit.
Decrease the Amount of Debt That You Owe
Credit utilization is an important factor in your credit score. In fact, its level of importance is only second to your credit history. When it comes to your credit report, utilization is depicted as a portion of the available credit that you are using. So, if you have $10,000 of credit available to you and you have used $7,500 of it, then the credit bureaus will consider your utilization at 75 percent.
When you use most of your available credit, it could count against you, causing your credit score to drop. To repair a credit score that’s lower because of excessive utilization, develop a plan to pay your debt quickly. Take a hard look at your expenses to find ways to reduce them. Use this money to lower your debt. Try to get your credit utilization to around 30 percent or less. As you lower your debt, the credit bureaus will see the progress that you’re making. You may even be able to watch your credit score and experience the satisfaction of seeing it slowly rise.
Your Credit Score Influences More Than You May Think
WalletHub confirms that those without a credit score pay about 65 percent more for car insurance than those who have an excellent credit rating on average. WalletHub’s Jill Gonzalez said, “Many consumers probably don’t realize their credit score is being used at all when they’re applying for car insurance.”
One consumer who had this happen to her is Alaina Leary, a 24-year-old from Boston. After her identity was stolen, the credit bureaus lowered her credit score. She knew that she would have trouble qualifying for a loan after this happened, but she didn’t know that her car insurance would skyrocket. John Espenschied, the owner and manager of Insurance Brokers Group, said, “Credit has been used for at least 17 years, and it has been proven to be an effective tool by insurance companies to predict risk of claims.” What it comes down to is that people who are more conscientious about their credit tend to be cautious drivers.
Employers may even check your credit report. In most cases, a prospective employer is not permitted to pull your credit score, but they may ask to see your credit report. Reports show things like bankruptcies, tax liens and credit card balances. It may even display your medical bills. Employers will need written permission from you to look at this information. But, are you going to refuse them if it means that doing so will lose you the job? If a potential employer requests access to your credit report, then you’ll want it to look as good as possible.
Just One of Those Things You Must Manage
When it comes to your credit score, it’s important to stay on top of it because repairing it can be a major headache. Until you fix your bad credit, you may have trouble borrowing money. Along with this, you’ll pay more for the money that you do borrow. There are companies that can help you build and rebuild your credit. But, it’s just one of those things in life that you’ll always need to manage. To do this effectively, make your monthly payments on time and don’t borrow too much.