How to Overcome Bad Credit
02 Jun, 2016 / By Jennifer Hamilton
Having a bad credit rating can be difficult. It will mean that you will be unable to get credit for other things that you need and it may stop you from getting a mortgage as well. If you can borrow money, you will be seen as more of a risk and will be charged a higher rate of interest as a result. You may therefore want to repair your credit rating so that you can have more opportunities in the future.
Pay Bills On-time
By paying all of your bills on time, you will be able to prove that you are a reliable payer. You may have some amounts outstanding on certain bills and you will need to pay these back too. It can be best to set up a direct debit so that the amount owed goes out when it is due. This is easy because it means that you do not have to think about making sure the payment gets sent. If you set it up to go out just after pay day, then you will know that there is enough money in the bank to cover it.
Pay Rent/Mortgage On-time
You need to be sure to pay back everything on time including your rent or mortgage. It may not always be easy to do this. It is wise to therefore make sure that you pay your bills as soon as you get paid. You will then know that there is the money available to pay it. It can be so tempting to treat yourself to something before you pay the bills, but you must resist this temptation and pay the money you have to pay out first.
Pay Back Debts
Paying back debts is a good way to improve credit rating. Some people feel that consolidating debt is better as it means you only have one visible debt. However, there is no sure way to improve credit rating as each financial institution uses different ways to calculate it. They may not see any difference between one large debt and a selection of smaller ones. It is probably best to just concentrate on getting them paid off as quickly as you can.
Earn More Money
Earning more money will help in several ways. Some lenders will use income as a way of means testing their borrowers. Having more earnings will therefore make it more likely that you will be lent some money. Another advantage of earning more will mean that you will have more money available to pay back your debts. It may not be easy but you could try asking for a pay rise or more hours at work. You could also try getting an additional job.
Check Your Credit Record
It can be worth checking your own credit record. There are ways of doing this for free. The reason for checking it is that there may be incorrect things on there. Debts that you have paid off, for example may still be listed on there. Maybe phone contracts that have been cancelled are still mentioned etc. It is important to make sure that it is correct so that lenders get the right information when assessing you.