Tips on Repairing a Bad Credit Score
Tips on Repairing a Bad Credit Score
Posted on August 28, 2020
There are more people out there with less than perfect credit than those with excellent scores. If you have a lower score, you can take heart in knowing that you are not alone. Credit problems can occur for a variety of reasons, but that doesn’t mean that you have to live with it forever. There are a few ways to improve your credit score, including being more conscious of your spending habits. Nexcar Auto Sales & Leasing has put together a few tips to help you boost your score and get on the path to excellent credit.
Make Payments on Time
Making your bill and credit card payments on time is the best way to improve your score. Even if you have a lot of outstanding debt, paying your bills on time shows that you are a responsible borrower. Payments that are habitually late, even by a few days, will have a drastically negative effect on your credit score. You can stay ahead of your bills by setting up automatic payments or by setting reminders on your calendar about due dates.
Mind Your Credit Cards
Credit cards are the most common cause of poor credit. It is easy to overspend when you have a high limit or multiple cards. If you have credit cards, you must attempt to pay them off as soon as possible. For those that have a high balance, make sure that you are paying a little more than the minimum balance each month to help reduce the total due. The closer your cards are to their maximum balance, the worse effect they have on the health of your overall credit score.
Cards that have late payments and those that are over the 50% limit mark are noted as bad debt on your credit report. Even if you are currently up to date, they show that you are having trouble managing your expenses. Cards that carry a high-interest rate should be paid off first, and any cards that you don’t need should be paid off and then closed. Make sure to only close one or two cards each quarter to prevent a large drop in your score.
Long-Standing Debt
Old bills that you may have forgotten about can be causing your score to tank. These may be as simple as small phone bills that you never paid off, or even a nagging old vet bill you forgot about. Once these are sent into collection, it can take years to get rid of them even after you pay. It is a good idea to check your credit report occasionally to see if there are old debts that need to take care of.
Patience and Good Financial Habits
After you have gotten an idea of what is causing your credit score to tank, you can make a dedicated effort to turn your finances around. Understand your debt and work on paying it down. Make your payments on time and avoid excess spending to help grow your savings at the same time. It will take time and effort to boost your score, but with these handy tips from Nexcar Auto Sales & Leasing, you will be back on the path to financial health in no time. If you need help securing a car loan despite your bad credit, give our experts a call at (416) 633-8188 today.