Why do we have to improve our credit score anyway?
To begin with, an excellent credit score means excellent qualification for loans with acceptable interest rates. This way, you can save more money in the long run. This also implies that it can be tough living in America with a bad credit score, and it can turn out more costly for you. People with not-so-great credit scores tend to receive higher interest rates when it comes to loans, and undoubtedly it reflects your reputation as well.
Reviving or repairing your credit score is a great way to start to save money and subsequently, improve your career path and opportunities. This will also improve your life in so many ways possible such as, relieving the burden of not being able to have access to loans easily when you need them the most. Here are a few steps you can take gradually to save your credit score and yourself.
1. Get a New Credit Card
As intimidating as it sounds, applying for a credit card with bad credit score can be challenging. However, the good news is some lenders can offer you the best unsecured cards for bad credit which is a great way to reestablish your credit score. Just keep in mind to only open one account to save you from having multiple debts. It is also worth taking note that these types of accounts give high interest rates. You can also opt to open secured credit cards which require you to present a security deposit which then gives you your due credit limit.
2. Review Your Credit Report
Before you start repairing your credit score, you first have to review your report to check what areas to need to improve on. Identify your mistakes one by one and gradually try to correct it. You can get a hold of your credit report yearly by phone, mail, or even online. Generally, you are entitled to a free credit report each year; however, if you already used up all your free credit reports, you can easily request for one from the credit bureaus, but you have to pay a fee.
In the condition that there are errors in your credit report that you believe you can dispute, do so. You have the right to question any information or transaction that you are not sure of. You can do this by contacting the bank directly and following their instructions. If the transaction is proven to be fraudulent, they can easily remove this transaction or at least investigate on it.
3. Bring Down Balances
One of the biggest factors in determining your credit score is the credit utilization ratio, which is the relationship between your total debt to your total credit. One great example is maxing out your credit cards. When you max out your card, it usually means you went way beyond your credit limit which affects your credit score badly. What you need to do is lower your credit limit, then gradually pay off your balances. This way, you are lowering your credit utilization ratio, thus improving your credit score.