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How to re-establish a bad credit score?

If you have a bad credit score, you may have realized that having one can make it much more difficult to get loans and credit as necessary. However, there are ways that you can work to re-establish your credit score or prevent getting a bad credit score in the first place.

Here are a few options:

·        Manage your bank acco​unt

  • Avoid NSF cheques and ensure that you are not in overdraft. This will help improve your credit score.

·         Always pay more than the minimum balance ​due

  • Paying only the minimum balance owing can seem like an okay strategy, but it can end up costing you a lot of money over time. Banks and stores deliberately make the minimum payment amount small, which means that there is a large amount of compounded interest on the unpaid balances.

          Avoid keeping small balances on your credit cards

  • Credit companies report balances owing to credit bureaus. No matter how small a balance owing on your credit card is, it can still hurt your credit rating. Even a small amount of money owed can make it difficult for you to get a mortgage or loan. For example, one woman was denied a mortgage because she owed six cents on her credit card!

·        Reduce the number of credit cards you have & how many credit applications you make

  •  Having a large number of credit cards can be a problem. Try to stick to a maximum of two credit cards if possible. It’s also important to note that having too many potential lenders looking into your credit can cause problems with your credit score.

·        Pay your bills on tim​e

  • Always try to pay your bills as they come due and avoid missing any payments if possible. This is essential to maintaining a good credit score.

·        Say n​o to pay day loans

  • Not only can payday loans end up costing you a great deal of money in a very short amount of time, but successfully paying back payday loans does not help repair a bad credit score. This is because payday loan companies do not report activity to the credit bureaus unless you go into collections.

·        Build a succes​sful credit history

 

Disclaimer:
The views expressed by the articles on this website do not necessarily reflect the services provided of this website. Prudent reports all your Prudent loan payments to credit bureaus. But Prudent cannot “fix” or “repair” your credit. The credit bureau reports on the totality of your credit activities. The bureau updates regularly on your payments on credit cards, utilities, taxes as well as to banks, finance companies, credit unions etc. Prudent does try to educate its credit-challenged customers on wiser management of their financial affairs using information from responsible financial sources. Source: Bankruptcy Canada and BDO.

Reference : the source of this article is Money Sense.

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