When you know that you have bad credit, you can be experiencing an extremely stressful time in your life. Sometimes the stress makes it difficult to focus on the positives and strive towards obtaining your financial goals due to all of that burden.
All hope is not lost, however, and if you’re wondering why most people never improve their credit, rest assured that you don’t have to be one of them.
They don’t know-how
There’s no real high school class, offering information on how to handle your credit to the best of your ability. Many millennials are not taught the basics of credit card information, and they may not even fully understand why they have a bad score.
If you are missing your monthly payments and not paying for the date agreed to with your credit provider, this is going to lower your score. While most people may know this, they might not know that the larger your balance on your card, the more reduced your credit will be.
Make sure you’re not just paying off minimum payments, attempt to keep a balance on your credit card as limited as possible. There are times that you need to make large expenditures, but it shouldn’t be for the duration of the year.
They aren’t sure how to check their credit
Many people aren’t even aware that they’re able to check their credit for free without any penalties once a year. We all hear horror stories about how applying for additional credit cards hits our personal credit as they run checks. However, you’re able to check your credit once a year through programs like Equifax or Transunion. According to thecreditreview.com, you should review your reports.
If there are any issues with the report, you should dispute them as soon as possible. When there are few error documents, all of the information that you can prior to filing a claim. The Credit Bureau is responsible for delivering a response within 30-45 days.
They never change their spending habits
If you have a bad score and you haven’t attempted to establish a budget or change your spending habits, this is probably a reason it hasn’t changed. Draft a template of your monthly expenditures and where you spend your money every month. After reviewing where you’re spending your money, it’s a lot easier to find somewhere that you can reduce spending. Maybe you need to shop at a grocery store or limit the number of trips to Starbucks, with a little restriction you’ll be on your way to improving your credit.
They think credit is bad
Many people who have run-ins with credit card companies and create a history of bad credit never try and fix the error. They might end up thinking that all companies are bad and evil. Truth be told, if you don’t have a source of credit, you aren’t going to have a chance to improve your score. If you’ve finally paid off your credit card and have a bad rating, don’t be worried.
Think about taking out a small loan or applying for a limited credit card and ensure you pay off the balance every month. By having a card with a limited balance and only spending what you can pay, you’ll be striving towards establishing your loan. Having additional forms of credit also looks good on your profile; if you have varying forms of credit, this can increase your score. Don’t go over your balance to the point it makes a considerable impact on the rating, but having a diverse portfolio can actually assist you.
They don’t get help
If you’re having a hard time fixing your financial situation on your own, don’t worry, you aren’t the only one in the world with this problem. There’s no harm in talking to your bank or a third-party credit counseling service to help get your affairs in order.
It’s best you create a financial plan with goals for when you want to pay off your debt, from someone who’s able to look at the situation objectively. You’ll want to do this as soon as possible if you suspect things are going south for yourself; the earlier that you tackle your problems, the sooner that they will be part of the past.
Regardless of its credit card company or a phone company, you want to be honest with your creditors as much as possible. If you’re two months behind on a phone bill, and the company calls you, answer the phone. Discuss your current financial situation with them and why you currently can’t pay. Let them know when you’ll be able to make a payment and how much you’ll be able to afford.
Companies appreciate this form of honesty, and if you’re trying to attempt to pay your bills and not trying to avoid them, they know you’ll probably make the payment. They may threaten to cut service, but as long as you’ve given them the truth, this shouldn’t be an issue. They might not be as generous if this is your third or fourth time trying to do this, but if it’s the first time, they will likely go easy on you.
If you’re trying to fix your credit and you don’t know what the first steps are, this is going to be a big issue. Try and educate yourself as much as possible, and make sure you use resources to check the report and review it. Set up a personal budget to follow, and don’t be scared of using credit in order to build your rank.
If you need a third-party to help review your finances to set personal goals, don’t be embarrassed. They’re likely only going to try to help you out. Be honest with the people that you owe money to, people’s generosity and patience may end up surprising you. Just because most people don’t end up improving their credit doesn’t mean that you have to be one of them.