How to Restore Your Credit Rating

Without a good credit rating an individual’s financial options can be severely diminished. In such a situation, it can be difficult to secure a loan or buy anything which requires a payment schedule such as a house or car. Thankfully, there are steps which can be taken to improve any credit score markedly by knowing why credit ratings are important and how they can be affected through prudent finances.

Why a Bad Credit Rating Should Be Avoided

There are a number of reasons why a bad credit rating should be remedied as quickly as possible.

These include:

  1. Rent: If you have a bad credit rating and wish to rent a property, you may find difficulty in doing so. If your credit history is poor then a landlord may take this as evidence that as a potential tenant, you have a bad track record for paying your debts and may struggle with rent.
  2. Employment: Some jobs require a credit check before a person can be hired. This is most commonly found in upper management positions or jobs which require financial knowledge. A prospective employer may use a bad credit score as grounds to not hire someone as they could feel that such an individual does not have the skills to handle money or finances.
  3. Loans: If a person has a bad credit rating, it can be very difficult to get credit approval. This means that lines of credits such as bank loans or credit cards may be closed because lenders cannot be sure that such an individual would be able to pay them back.
  4. Stress: Having debt or being unable to secure new lines of credit can have a severe impact on a person’s well-being. It is for this reason above all others that you should try to improve your credit rating as quickly as possible.
  5. Future Purchases: For certain items such as a car or mobile phone, there is a strict credit checking process involved. If your credit rating is poor then you might be refused when looking to buy such a product.

Tips for Getting a Good Credit Rating

Dealing with a poor credit score can seem like an endless struggle, with little light at the end of tunnel. Thankfully, this impression is not in fact true. There are many things a person with a bad credit rating can do to improve their situation markedly. All you need to do is remain calm and approach the problem in a systematic way.

Approaches for improving a credit score include:

  1. Find Out Your Score: In order to improve your credit rating, you’ll need to know exactly what your score currently is. To do this, you’ll need to get a full credit report. There are a number of credit report compilers which will create an in-depth report for you at little cost. The report will show exactly what debts have been plaguing any credit rating and when payments might have been missed.
  2. Asses For Inaccuracies: It is quite common to find that there is a mistake on a credit score. In order to identify this, order a report from more than one company, then compare them. If any differences can be seen, then businesses are seeing an error when viewing one of the reports. Looking through each report, it is important to account for each late payment and debt attributed to you. If some are mistakes, then you should contact a credit reporting bureau to have the report amended. This can improve your credit rating markedly.
  3. Prompt Payment: The worst thing you can do is add to a bad credit rating by missing debt payments. Whether it is rent or for a TV package, these bills have to be paid on time and in full or your credit rating will get worse. Make sure that all bills are taken care of each month. If they cost too much, then contact a debt management advisor or cancel luxury payments you do not need to free up more money.
  4. Research: There are many approaches to increasing a credit rating. It’s essential for customers to expand their knowledge by visiting resources such as the Wescot debt blog, so that they can apply all available methods to their situation. This also lends a level of adaptability to the process where situation specific techniques can be learned and then used to greater effect.
  5. Increase Debt: This sounds like a strange piece of advice, but by taking on a new debt and then paying it back quickly your credit rating will improve. A great way to do this, for example, is to take out a very small loan and pay it back as quickly as possible. If your credit rating is particularly bad then you might have to secure it against something you own. This will show anyone looking at your credit rating in the future that you can pay your debt.
  6. High APR Credit Cards: If you can’t get access to a small loan and don’t want to go down the payday lending route, then getting a high APR credit card is a great idea, as long as you don’t spend too much on it. Many companies offer these cards with high interest, but if the limit is small then you can max it out and then pay it back quickly. Obviously, this should only be done if you have the funds to do so. Not only will this show that you can pay off debt, but just having a credit card will increase your credit rating, showing that companies are willing to give you a line of credit.

Improving a Credit Rating Takes Time

The important thing to remember about building a good credit score is that it takes time. It’s a process which requires consistency in paying bills and managing any debts. If this can be done, then slowly but surely, your credit rating will improve eventually to the point where you will once again have access to better lines of credit.