*Almost 30% of Americans have bad credit. Are you one of them?
If so you may be dreading trying to buy a home or a car and being passed over for the best loan terms because of your credit score.
But why stay in that category?
There are plenty of things you can do to rebuild bad credit. All it takes is a little effort and a bit of time (and on-time payments, of course).
Interested in learning more? Let’s look at several tips for how to get out of bad credit.
Make On-Time Payments: Every Time
The most important factor in deciding your credit score is on-time payments. It makes up 35% of your total score and is something that lenders are very interested in.
Put reminders in your phone, set up automatic payments, pay your card as soon as you get paid — do whatever you have to do to make your payments on time.
Get a Secured Card
What if you can’t get a card? To build credit, you have to have credit. Perhaps you shut down all your credit cards and swore you’d never take one out again because it got you in so much trouble before.
However, don’t let your fear of failure keep you from rebuilding your credit. Take charge of your finances and don’t let your finances take charge of you.
Apply for a secured card. You put down the money for the card so you’re essentially borrowing from yourself. For example, if you put down $500 you can charge up to $500 on the card. As you make on-time payments, you’re showing creditors that your habits have changed.
No Credit Check Loans
What if you don’t have the money to get a secured card? Companies like Bonsai Finance offer no credit check loans. They look at other factors like your income level and on-time rent payments to determine creditworthiness.
Take out your loan, make your payments on time, and watch your credit score rise. It will take time, but you can do it.
Pay Down Your Debts
Credit utilization is also a big part of your score. This is the ratio between how much credit you have available and how much you’re using. A lower ratio is a quick way to bring up your score.
Focus on paying down your debts as much as possible. Start with your highest interest loan first as that will save you the most money. Budget as much of your income as you can to go towards paying down your debts.
How to Get Out of Bad Credit: The Top Tip
You didn’t know how to get out of bad credit, but now you do. Don’t give up. Persevere and don’t ever miss a single payment. If you do, make it as soon as you remember and communicate with your lender.
Your situation doesn’t have to go from bad to worse. With a little hard work, you can make it better.
For more great tips on just about everything, feel free to browse our blog!