6 Ways You Can Overcome A Bad Credit Score

0
467

Your credit score holds huge importance, which can be a daunting thought if yours is currently not looking its best. Your credit score is used to show lenders how much of a financial risk you could be to them. Therefore, it is essential that you maintain a good credit score.

If your score is bad, this doesn’t mean that you should give up. In fact, there are plenty of steps that you can follow to improve it, which this helpful guide will discuss. Take inspiration from our six top tips below and defeat that bad credit score. 

Pay All Your Bills On Time

For some of us, this step is a lot easier said than done. However, if you want to improve that all-important credit score, it is time to get into the habit of paying your bills on time. Not only will this help you keep your finances in order, but it also portrays you as a reliable borrower. Lenders will gain confidence that you can handle the responsibility of taking on credit. Failure to pay your bills on time will have the opposite effect – something you want to avoid. 

To pay your bills on time, you will need to become more organised. Utilise the use of to-do list apps. You can find the best ones online. You can use these apps to mark payments in your calendar and set reminders to alert you on the days you need to make a payment. This is the ideal solution for those who struggle to stay on top of their monthly bills. It can certainly help you become more organised and improve your credit score. 

Organise Any Outstanding Debts 

If you have any outstanding debts, it is time to start paying them off. It can be easy to push debt to one side and ignore it. The sad reality is this won’t make it go away. Over time, you will find yourself in a more complex financial situation, and the list of piling debts will continue to affect your credit score. The important thing to remember with debt is you are not alone. In the UK, it is thought that 63% of the adult population have some form of personal debt. The good thing is that there is a way out. 

Start by listing your debts in order of priority. Pay off the debts with the highest interest rates first, as this will help you avoid any additional expenses. On months where you have a bit more money spare, pay off more than the minimum amount. This will help you speed up the process of paying them off. It may mean that you have to say goodbye to some of your habits, like buying a takeaway coffee on your way to work. However, sacrifices like this will pay off in the end. 

Choose Understanding Providers

Often, we turn to providers for necessities like our mobile phones and insurance. Depending on the providers you choose, some may conduct a more rigorous credit check than others. The thought of this can be pretty daunting. Luckily, there are ways to overcome this. For example, if you need a mobile network provider in the UK, you can find organisations like Lebara, who conduct no credit checks whatsoever. 

Although you are on the journey to improving your credit score, this doesn’t happen overnight. This means you may require a mobile network provider at this current moment. To overcome this, you can choose a company like Lebara, which take this stress away. It is always worth doing your research first. Some providers will conduct a rigorous check, and if you know your credit score is poor, you could be wasting your time. Research is vital to help you find the right providers for you.  

Keep Old Accounts Open

You want your lenders to put their trust in you. For this to happen, you need to give them confidence that you can successfully take on the responsibility of credit. An excellent way to show this is by keeping your old accounts open. Most people think closing their old accounts can help them improve their credit score. However, this can have the opposite effect. If you have a long-standing account where you have only used a small amount of your credit limit, this can positively affect your credit score. 

You need to focus on building a better credit history; you can learn more about this online. The vital thing to remember is this won’t happen overnight. However, the sooner you start taking the necessary actions to help, the quicker you can begin to improve. If you have a long-standing account with a poor history, try to remind yourself that it can be improved with the right attitude towards your finances. 

Learn How To Budget 

Budgeting is a crucial step in helping you improve your credit score. Not only will it help you gain a better understanding of your spending habits, but it will also help you save money each month which can be put towards paying your bills on time. To start, you will need to acquire a budget planner. You can find these online or even use an old notebook. Use the planner to write down your monthly household income alongside your expenditure. 

Doing this will allow you to identify areas where you are overspending. You can then make necessary cuts to save money each month. For example, if you have a membership with multiple subscription services, narrow them down to one. Although you may think you are only saving the odd penny here and there, it can soon start to add up. Learning how to better your budget each month will help you save money while improving your credit score. It can make the prospect of paying monthly bills a lot more manageable. 

Remain Calm

Although it may sound like an obvious point, it is one that so many people can forget to do. If your credit score is bad, you need to try and remain calm. With the right attitude, it can be improved. This will help you think clearly about what you need to do to improve it. Getting yourself worked up over your credit score can add a lot of pressure and stress to your life. For some, stress can be a spending trigger, and as a result, you can start spending money on items you do not need – getting you into a difficult financial situation. 

Instead, during times when you feel stressed out by your credit score, you should try and engage in an activity that helps you feel relaxed. Take a look at some destressing activities online for some inspiration. Stress can have a negative effect on your life, and it can certainly make it harder to think clearly. You need to constantly remind yourself that a bad credit score is not the end of the road. You can still follow the right steps to help you improve it. 

Summary

By following these top tips above, you will be well on your way to improving your credit score. The process should always start with a clear understanding of budgeting. Once you understand how you can save money and what you can realistically afford each month, you will be able to take on the responsibility of credit. It can give you the confidence that you will have enough money to pay your bills each month. It is also recommended that you use the internet to your advantage. There are plenty of forums and resources that offer valuable advice on overcoming a bad credit score.