Perhaps you may have lived a little too frivolously when it comes to your money, before, or perhaps you have simply never had the opportunity to build up a credit score. Whatever the case, without a high credit score, it can be difficult to get good deals on cars, mortgages, business loans, and the like. For that reason, you may want to know some effective ways to turn your bad credit around, and here are a few tips for just that.
Don’t rush to close open lines of credit
Your credit score isn’t about how good you are at avoiding debt. Rather, it’s about how much you can be trusted to adhere to the credit agreements that you have. As such, if you have open credit cards, overdrafts, or other lines of credit, don’t rush to close them just yet. Closing too many at once can effectively show that you’re not ready or willing to handle credit agreements, which can harm your score.
Make sure you pay your bills on time
However, there are certainly some kinds of debt that you want to avoid. One of those is the debt that comes with failing to pay bills on time. Follow some financial tips, such as maintaining a budget and monitoring your outgoing expenses to get an idea of when your bills are due and when you should make sure you keep some money aside to pay them.
Pay off your existing debts
You may not have to close all of the accounts that are holding some of your debt, but you should certainly have a plan to pay off any debt you have. It’s a good idea to start with the debts that have the highest rates of interest soon, and debt consolidation loans can help by capping some high levels of interest. Other people prefer the snowball method, closing the smallest debt first to serve as motivation to keep paying the others off.
Be sure to check out your credit report
There are several credit reporting agencies, such as Experian, that allow you to request to see your credit report once a year for free. It’s a good idea to know what, exactly is affecting your credit. However, when you scan through it, keep an eye out for erroneous reports. These happen all the time, whether it’s a false late mark for something you paid, someone else’s credit activity mistaken as yours, or others. When this happens, you can dispute them.
Get a boost by connecting your account
Some credit reporting agencies will allow you to connect your current account to their credit record. This gives them more accurate information on how your money is managed, which can help avoid erroneous reports, but many of them also offer an immediate boost to your credit score as an incentive.
There are more ways than just the above tips to help improve your credit score, but these are the tips that will be most effective. So long as you don’t default on any debts, it shouldn’t take long at all to start moving that score back up.