Frugal Living

Had a Financial Crisis? Here’s What You Can Do to Restore Your Credit Score

Had a Financial Crisis? Here's What You Can Do to Restore Your Credit ScoreIf you have a less than perfect credit history, it might be harder for you to budget ahead and secure financing for long term investments. You are more vulnerable to changes in your circumstances, and will be offered higher interest rates than those with a perfect credit history. If you have missed payments after getting through a hard time, you can start consolidating your finances and starting to rebuild your credit score. There are several methods people have successfully used to improve their chances to get accepted for better deals and financial agreements. Find out more about them below.

Prepaid Credit Cards

If you have had issues with credit cards before, but love the protection and security they provide, you can get a prepaid credit card to make purchases every month. You might be able to top up your prepaid credit card through your checking account each month, and eventually you will be issued with a small line of credit. If you tap into this credit allowance each month, and pay it off on time, you can build up your credit score over time. Make sure that you can afford the credit limit offered on the card, and you don’t get charged too much for having an account with the prepaid credit card company.

Secured Loans

You might want to close all your outstanding credit accounts and consolidate them to make it easier to pay the balance each month. If your interest rates on different financial products are too high, you might want to think about taking out a secured loan with better conditions and longer repayment terms. If you have a house, you can get a home loan for over seven years, or if you have a car, you can look for simple and quick car title loans online to make your repayments more affordable, and spread them over a longer period. You can reduce your monthly loan and credit card payments by hundreds of dollars, and make sure that you can afford paying the company each month.

Small Amount of Credit Short Term

You might apply for a line of credit with your bank available for emergencies. While the
money will be there for you to use, you don’t have to do so. Tap into the reserve once a month and make repayments in a few weeks’ time, so you can prove credit companies that you are a good payer. Make sure that you don’t use the money for longer than a month, and you pay it back to your bank before you would get charged a fee or interest.

Change Your Payment Dates

When you have a lot of credit accounts and bills going out on different dates of the
month, you will find it difficult to manage all your payments. If you get paid on the same date each month, set up all your repayments to go out a few days after your salary hits your account. If your employer pays you every two weeks or every week, spread your payments around, so there is always enough money to pay your creditors. This method alone can make it easier to manage payment dates and avoid lateness.

Put Off New Applications Until Your Credit Score Is Up

It is important that while you are in the process of building up your credit score you limit the number of applications for loans, credit cards, and car finance to the minimum. The more applications you have in a certain period of time, the more your credit score will go down. You need to make repayments regularly, keeping an eye on the deadlines and terms. You will not be able to erase the negatives of your credit files for a while, but you can build up the positives over time. No matter how tempting a credit card offer might seem while you are working on improving your bad credit, it is not a good idea to open a new account until your credit score is up.

It is easier to ruin your credit history than fixing your bad score. You need to be patient and have a detailed plan. Instead of applying for further credit products, try to consolidate your outstanding balances into one easy monthly repayment, and build up your score gradually by making payments on time. Negatives stay on your credit file for 7-10 years, and there is nothing you can do about it. Keep on focusing on the future, and you will soon see some improvement when you check your credit file.

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