How to recover from bad credit?

Maintaining a good credit score is not easy. We all have faced situations in our lifetime when our spending and earnings didn’t meet in the middle and which, in many cases, led to us spending more than we could afford. The consequences of such unfortunate events can be very far reaching and damaging to us for years to come. One of the very early areas that will see those negative impacts is Credit Score.

When you get a low credit, you may have difficulty acquiring a good rate on your loan. You may even not qualify for a loan, you may, in serious cases, lose your credit card as the result. Let’s assume every bad thing has happened to you and now you want to build your credit again. What should you do? Below are few tips that we hope can help you with your recovery.

Always make your payments on time

If you cannot afford to pay the whole amount, at least pay the minimum payment. Do not ever miss it. History of missed payments can stay on your record for many years to come and they can significantly damage your score. One way to make sure you don’t miss the payments is to have automatic payments set up in your account.

Consolidate (or Refinance) your debt

Consolidation can help with making everything streamlined and easy. Instead of keeping track of 10 different payments, you do only one. What’s good about refinancing is that you can pay the debts and have better terms and longer payment times. Remember, when it comes to paying off the debt, always start with the one with the highest interest rate.

Keep your balance low

Utilization of the credit is a very important factor in having a good credit. The magic number is 30%. If you go below the 30%, that is if you use more than 70% of your available credit, you may start to see your credit score going down.

Use only what you can pay back

This is the golden rule of using credit cards. Never, ever go over your limits simply because the credit is there. Always remember the reason you have a bad credit in the first place. It may be hard to say no to that new jacket you always wanted to get but no pain, no gain! If you want the good credit, the jacket may have to wait a bit.


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