Bad credit is like a stain on your life that just won’t wash away. Once you’ve dipped your toes into the waters of debt, you’ll find it difficult to take out loans in the future, get approved for a mobile phone or even buy a house. At this point, many people decide to approach a bad credit mortgage provider instead of going through usually channels because they know it’ll negatively affect their credit score even more. A poor credit score can severely reduce your options in life, but it doesn’t need to be such a dirty mark on your life. It’s not all over though, there are companies out there that will approve loans for poor credit individuals needing instant cash or a long-term loan.
Dealing with bad credit can be a nightmare if you aren’t aware of how to fix it. (Source)
Understanding why you got into this mess in the first place
The first difficult step is realising why you’ve gotten into this mess in the first place. Was it poor spending habits? Did you take your credit cards too tightly? Have you been living a life you can’t afford?
The reason we drop into low credit scores is usually because we overestimate how much we actually earn. It’s important to use some accounting software on your phone or the computer to calculate how much money you earn, how much money you spend and how much you can actually spend on personal luxuries. It’s difficult to gauge without writing down the figures and calculating them, so take your finances seriously and you’ll quickly find ways to reduce your spending and increase your savings.
Reforming your ways and improving your credit score
In order to improve your credit score, it’s important to change your ways. Here are just a few things you can do to boost your credit rating:
- Start paying your debts. If you owe money, start paying it off as soon as possible. The last thing you want is for companies to be sending you angry emails and letters telling you that you owe them money. This reflects poorly on your record and doesn’t help your cause. It is important to remember that your credit being worst than you would like doesn’t define you or your finances. In fact, it is even possible to apply for a motorbike loan with bad credit which shows that the situation you find yourself is not the end of the world.
- Never skip a bill. Missing payments, be they for bills or repayments for a loan, doesn’t sit well with lenders and you’ll be permanently stuck with a poor credit rating if you don’t pay them on time.
- Secure more income. This is easier said than done, but by working extra shifts or looking for a better paying job, you can secure more income to help you pay off your debts and improve your credit score.
Emergency funds for emergency situations
Even if you’re living with bad credit, it’s important to find emergency funds when you need it. A private money lender could be what you need as a safety net, but it’s best not to rely on private lenders as a quick source of income. Instead, think of them as last resorts that will help you fix an emergency issue or pay for car repairs so you can get to work.
Working towards a debt-free life with good credit is difficult, but with a bit of work, it can easily become a reality worth looking forward to. It takes good money management and some dedication, but it’s simple to stay in the green once you learn the errors of your ways.