How To Make A Bad Credit Situation Better

Bad credit should not have to be a lasting problem for anyone

. If you are presently struggling with bad credit, don't give up. There are things that you can do to get out of that situation. Read on the rest of the article and start your way to recovery today.

1. Do not take on more responsibilities than you can handle. This may not be the right time to apply for a new loan or get a new credit card. It would be better if you focus on the problem at hand and work on raising your credit score. Once your credit rating has improved, you will be in a much better position to handle new accounts. Furthermore, you will be able to qualify for lower rates if you have good credit.

2. Do not terminate your oldest credit cards. Some people may act hastily and close out their old credit cards to avoid incurring new debts. However, such action may only do more damage to your credit. Why? The length of your credit history is an important factor in your overall rating.

If you've had that credit card for a long time, closing it out would be like erasing the old parts of your credit history. The best thing to do is to keep watch out your credit card spending. You can still use your old credit cards for minimal purchases and avoid unnecessary fees by paying off your full balance on time.

3. Submit your current payments on time. Payment history makes up 35% o f your FICO score. If you've been guilty of missing your payments in the past, then obviously you will get a low rating. You can still recover from a bad credit rating by being prompt with your current payments. Paying on time eliminates the penalty fees and eliminates the risks associated with secured loans.

3. Regularly check your personal credit report. If you live in the US, you are eligible to receive one free copy of your credit report each year. Just visit www.annualcreditreport.com/ to make the request. Once you have your report in hand, carefully examine it for possible errors or unauthorized charges.

Erroneous reporting and fraud are two common reasons why consumers get a lower score than they deserve. If you found incorrect details in your report, send a dispute letter to the bureau that issued your report to have them updated. Doing so can instantly raise your score by a number of points.

4. Adjust your lifestyle. For many people, their bad credit problem is often a result of spending more than what their income allows. Are you aware of your debt to income ratio? Calculate your overall monthly expenses and compare it with your salary. You may be surprised to find out that your expenditures actually exceed your monthly earnings.

If that is true in your situation, then it's about time to make some changes. Look for practical ways on how you can cut back your expenses. Make debt repayment your priority. Create a definite budget plan that will guide you with your spending each month. With self-discipline, hard work and determination, you should be able to get out of bad credit sooner than you think.

by: Liz Roberts

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