It’s a fact that unexpected things will happen to you in your lifetime. Your car could break down, you can lose or job or — even worse — your home could catch fire and ruin everything. Anyone who has been through these situations could tell you that while insurance can help, there are some situations where an extra cash source could come in handy.
Enter the world of credit. Loans, credit cards, cash advances and many more situations depend on your personal reliability as an individual, or as it’s called in the business world, your creditworthiness. An individual’s creditworthiness is a mixture of one’s credit history — which includes a record of credit card and loan payments and debt — and a credit rating (or score), which is a three-digit number that gives individuals an “at a glance” summary of one’s credit.
But mistakes can happen and things don’t always go as plan. Loans can go unpaid, cars may be repossessed and homes are foreclosed upon. These types of actions cause a person’s credit score to go down, making it harder for that person to have future loans and credit cards. Worse still, some landlords and employers will consider a person’s credit score when dealing with them, marring one’s potential for employment or housing.
Getting a low Credit Rating isn’t a death sentence. There are plenty of ways to fix it and help bring yourself back to a good score.
The first thing you need to do is have an updated copy of your credit report handy. In the United States, everyone is entitled to a free credit report once per year, and sites like Equifax will allow you to do so. After you see who is giving you bad credit and why, you can take the following actions:
Dispute Bad Reports
Everyone makes mistakes, even creditors. You can dispute bad reports through Equifax, Experian or TransUnion and quite possibly quickly fix some of your bad credit.
Try to Negotiate Terms
As for the bad reports that are not mistakes, there is no harm in trying to make some deals, especially if your debt is from a long time ago. Many creditors will jump at the opportunity to get at least some money back as soon as possible, even if it means setting extremely low payment amounts or forgiving some debt (or interest) altogether.
Try Again
If you think you can do it better this time, get some low line credit cards and use them responsibly. Make small purchases and pay them off on time to start building your credit back up. If you’re having trouble getting a card by yourself, you could always try becoming an authorized user of a friend’s or relative’s card. If you’re doing well, try to keep those credit cards open. Closing cards can impact your credit score.
Pay Bills on Time
Utility payments and cable TV/internet costs can have just as much (or more) of an impact than your credit card debt, and unlike credit cards, you can’t go without them. Don’t bite off more than you can chew, and automate your payments if you’re forgetful.