A simple guide to get rid of a bad credit

Many have fallen victim to the nasty consequences of living with bad credit. It might seem like an insurmountable situation, but it’s not as bad as it seems. Knowing what your credit status looks like and how you can go about improving a bad credit situation is important.

If you find yourself with bad credit, the worst thing you can do it bury your head in the sand and ignore it. Take steps to address the situation and you’ll relieve a lot of the stress and anxiety that comes with this type of problem.

Follow these 5 steps and you will be well on your way to getting your hands on some good credit! 

Also Read: Apply for Personal Loan with Bad Credit Score

1) Figure out where you stand right now: 

Get a copy of your credit report. There are a few ways to do this. You can get a basic report for free from services online such as clear score, Experian and totally money. This will give you an initial indication of where you stand and how your score looks.

You can usually dig into the details even on these free services and find out the markers that show you what is dragging your credit rating down.

This can be for a number of reasons including, late payments, not paying your bills at all, large amounts of debt and defaults on loans. These are all signs that you have a poor credit rating. If you can’t see it clearly, take the next step and get an official copy from the credit agencies.

2) Dispute negative marks

Once you have a copy of your credit report and you understand why you have bad credit, it’s important to dispute any negative marks that appear on your report.

Debt collectors, lenders and most creditors will be obliged to respond to this challenge. If they continue to claim that you owe money or you have defaulted on a loan, then they simply have to tell the truth — check with the credit reference agencies to see if there’s any truth in this.

3) Pay all your bills on time going forward

Now that you’ve disputed negative marks, it’s time to start paying your bills on time and clearing off your debts. Make a list of all the bills you need to pay and schedule them in. This will be so much easier if you are organised.

On top of this, start to clear off any debts that you have. Make a list of all your loans and credit cards and find out how much you owe.

If you don’t know, call the companies and ask. If you are paying the minimum level of payment, this is a perfect opportunity to re-finance your debts and slash the interest charges.

If you have overcommitted and cannot afford to pay off a balance without accruing high interest then CALL your creditor and explain the situation. You’ll find that most lenders are quite willing to work with you to help you get back in control. This might mean they are able to freeze the interest or restructure your credit to make it more affordable.

4) Get a short-term loan if you can’t handle paying all bills.

Sometimes, it can be beneficial to get a short-term loan for people with bad credit to consolidate your credit into a single, manageable payment. The benefits of this are two-fold.

Firstly, you only need to pay one direct debit rather than several.

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Secondly, at the end of the loan, you have paid all your debts off and can stop worrying about defaulting or going bankrupt.

If you find that a short-term loan is out of your league but you can’t handle paying all your bills for a month, don’t panic.

Talk to a debt counsellor about getting help with the daily payments and try it for a while. The citizens’ advice bureau offers a service that can help you get control of your finances and will even help you with contacting your creditors.

5) Increase credit limits.

If you’re struggling to pay your bills because of cash-flow issues, a good idea is to look into increasing your credit limit. This will enable you to borrow more money without worrying about going over your limit and racking up excess charges.

When applying for a credit limit increase, think carefully about how much extra cash you’ll need. Make a list of all the things you could do without spending money on that would help to improve your financial situation and then get ready to start shopping around for offers.

Often, if you’re dealing with credit cards, there are transfer offers that give you options like an interest-free period when you transfer an existing balance. These types of offers can save you a lot of money in interest and, if you’re accepted, can make paying back the debt a whole lot easier.

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In conclusion

When it comes to credit, getting approved for credit cards is the easy part. The hard part is ultimately managing your debt and making sure that your credit card doesn’t eventually ruin your financial well-being.

Get a copy of your credit report and make sure that the bad marks are not accurate. If they are, dispute them and start paying all your bills on time. Eventually, you will get your good credit back and be much happier in the long run.