Having bad credit can really put a damper on a lot of things in life. You’ll struggle to buy a home or a car, or take out any kind of personal loan. Worst of all, if you’re stuck in your bad credit, chances are you’re only falling further and further behind because you’re still abiding by your old habits – you know, the ones that got you into this mess in the first place? The good news, however, is that we have 10 incredible credit tips to help those who have bad credit change their ways. Follow these, and we’re certain you’ll be much more aware of your spending habits and obligations, and be back on track toward financial stability in no time!
As you already know, when it comes to almost any bill, credit card, or other expense, if you don’t pay what you own by a certain date, you incur a late fee. That’s why, being punctual when it comes to your payments is key. Paying on time, and in full, prevents any late charges or penalties from incurring, so do your best to be aware of what exactly is due when. Get a calendar if you have to, or a planner. You can also set alarms on your phone, computer, or other devices if you prefer. Whatever trick you need to use to help you remember, just do it. And if worst comes to worst and you just can’t pay, try to let your utility company or whoever it is know, and ask for a extension or waiver. Good communication can go a long way.
Use Auto-Pay Features
Many service providers have an auto-pay feature that allows the company to deduct an approved amount of funds from your account automatically on a set date each month. This is an especially useful trick for those who rack up a lot of late fees simply because they’re forgetful and pay their bills on different days each month. Even if that isn’t you, it can still be a pretty useful tool for keeping track of all the most important expenses in your life.
Don’t Let Balances Carry Over
If at all possible, try to always pay off what you owe before each new billing cycle. For instance, if you have a credit card paid off, or mostly paid off, try to use it more like a debit card, and simply pay off the charges after each use. That way, your card is getting a lot of use, but your balance always stays in the green!
Don’t Obsess Over Your Credit Score
Your credit score is not like your bank account. It isn’t a live, up-to-date representation of your credit or fiscal value at any given moment. In fact, you may notice if you check your credit every month, week, or even every day, the numbers might not change hardly at all. If you want a more accurate representation of your progress, only check your credit two to four times a year. It may not seem like a lot, but it’s the only way you’ll see the difference you’re looking for.
Don’t Fear Higher Credit Limits
For someone with bad credit, a higher credit limit only looks like more problems, a deeper hole to fall into. However, if you feel like you can control yourself, increasing your credit limit can actually do your credit some good. Think about it, if you have a $100 credit limit now, and you’re maxed out, that looks really bad for. However, if you had a $1,000 credit limit and you were only $100 in debt, that would be only 10%, making you appear much more responsible to any lenders who might be looking.
Lower Your Interest Rate
This may not work for everyone, but it’s one of those things where it can’t hurt to try since the worst you can be told is no. The best case scenario is, you get the reduction you ask for, as well as the opportunity to pay your debt down faster because your payments are lower and much more affordable.
Keep Your Good-Standing Credit Card Accounts
The more credit you have, the more responsibility you have. If you make all the right choices, keeping each account in good standing, you will appear incredibly financially responsible making it easier for you to get approved for financing when you need it. So don’t cut your cards up and cancel your accounts when you pay them off. Instead, keep them, and prove to future lenders you can handle being responsible with open lines of credit.
Don’t Open Any New Accounts Unless You’re Ready
The average person may receive up to 50 pre-approval offers in the mail each year, some even more. However, that doesn’t mean you have to jump at the chance to get a new card every time it’s offered. Instead, be picky about when you open a new account. Are you making a big purchase, or are you just desperate for money and looking to a new credit card as your way out of a tough spot? Think hard about your needs and motivations, and consider the potential consequences.
Prioritize Revolving Debts
Your revolving debts are your obligations that have high interest with payments based on the fiscal amount you owe, versus installment debts, which are long-term loans such as auto loans and mortgages. That means, paying off revolving debt first can prevent you from paying extensive interest over time, making you look much better to potential lenders. Credit cards, account overdraft protection, and home equity lines are just a few examples of revolving debt you may want to consider paying off if you have them.
Check Your Credit Report Once A Year
Everyone is able to check their credit for free once a year through any one of three major credit bureaus, so you should make sure you do. This will allow you to review everything and make sure it’s right. If it’s not, you can dispute an issue and have it fixed, potentially boosting your credit score! Just remember, if you ever need any car loans, Suburban Auto Finance will be there to help you out, no credit check necessary. Apply Now to get your pre-approval so you can start car shopping our available inventory right away!