When you have your degree that you have worked so hard for and you’re starting to make your way in the world, the last thing you want to be holding you back is poor credit. It’s all too easy to run up high debt and problems with your credit, and these problems can last for many years, making it difficult to move on and buy a car, obtain a loan, buy a house, or even rent one. It makes sense for you to fix your credit as soon as possible (maybe even while you’re still studying) so that by the time you head out into the world, your credit score is a much more successful one. Here are some tips on how to make your credit good again.
Look At Your Credit File
The first thing you will need to do before you can start fixing your bad credit is to check your credit file. This will tell you what the problem really is, and there are companies that will show you where you went wrong. Once you know that, it becomes a lot easier to make the changes necessary to start building your credit up again. There are many websites that you can choose from to input your data and receive your results. Some will charge you, and some are free so make sure you check around before you make the decision as to which one to use.
Once you have signed up and you can see your credit report, take some time to go through it and work out what has happened to make your credit score a low one. Then you can take the steps needed to make it right again.
Check For Errors
Although most of the time your credit file will be entirely correct, there will be some instances where there might be errors, and if you find any you need to point these out as soon as you can; they might be the cause of your poor score. Your name might accidentally be linked to someone else – someone you don’t know – and this can be lowering your score, even if you have never had a serious issue with debt or repayments yourself. This person might have lived at your address before you, or have a similar name to yours. Another error could be a negative mark against a missed loan payment when in fact the loan was paid off some time ago.
Make sure you put your complaint in writing so that there is a record of what you found. Although it can sometimes take a long time to fix the errors, it must be done in order to maintain a good score.
Get A Credit Card
Although it may seem like a counterintuitive idea, applying for a credit card specifically made for those with poor credit like the OpenskyCC can certainly boost your credit score over time. Even if it was a credit card that caused you problems in the first place, this kind of card can help.
When you have credit, but you aren’t using it, this gives you a better credit score, so cards that are all maxed out will cause you problems. Therefore, getting another credit card and transferring some of your existing balance onto it will increase your credit score because instead of one maxed out card, you’ll have two cards that are only half (or so) used.
Pay More Than The Minimum
When paying back a line of credit, you will often be given the option of paying a minimum amount each month. If you do this, it might save on your outgoings, but it will take a lot longer (and cost you more in interest) to pay it back. In the end, you will have spent a lot more by paying it all off slowly that if you had paid more than the minimum.
Of course, depending on your circumstances you might not be able to pay more than the minimum, and certainly not every time a payment comes due, but it is good to do so if you can. It might mean you need to use your savings, but if you think of how much you’ll be saving over time, you’ll be able to recoup those savings fairly quickly. Plus, the quicker you pay off your debt, the better your credit score will look.
Look At The Interest
Every debt you have is sure to have some amount of interest attached to it; this is how lenders make their money, after all. The debts with the highest interest charges are the ones to deal with first – these are the ones that will give you most spare cash when they are paid off, plus if you have many high-interest loans and cards, they can affect your credit.
Once you have paid these off, you will be left with older, lower interest loans and debts. These won’t have such a negative impact on your credit, and although it is important to pay everything off, these aren’t quite so urgent. With the money you were spending on the other debts, you should be able to pay these ones off more easily too, reducing your borrowing by a large amount.
Speak To Your Lenders
Negative marks can stay on your credit file for many years, even if everything is now up to date and you haven’t had any issues at all for a long time. If this is the case, it might be worth speaking to your lenders and asking them to remove those negative marks. If they aren’t taken off, the will automatically be removed after six years, but during that time they can cause a lot of damage.
Don’t Close Your Accounts
What do you do once you have completely paid off an account? The usual course of action might be to write to your lender in order to ask that it be closed down. However, that might adversely affect your credit score, as strange as it may seem. When you close down your accounts, you are reducing the amount of credit you have available to you, and therefore increasing the amount of credit you are using. Closing some accounts down is a good idea, but keep one or two open to help you increase your score.
