Your credit score has a big impact on your financial health and if you don’t have a good credit score you will be hampered when it comes to getting a loan or getting a good interest rate. If you are hunting for an apartment, this is something that will be evaluated. But there are certain ways you can repair a poor credit score so that you have an easier time with certain parts of your life.
The first thing you need to do is review your credit reports
You can get copies of your credit reports from the major bureaus and go through them to check whether there are any inaccuracies. If you find an error or any inaccurate information, you can have this removed from the credit report so that it has a positive impact on the score. You can also get the guidance of a credit repair company that will do much of the homework for you and give you solutions on how you can improve the credit score. And as everyone does, you will have a lot of bills to pay. And one thing that can damage your credit is not paying these bills on time. So you need to make sure you know what the due dates are. You can have a reminder app installed in your home so that you know exactly when to make the payments. This will prevent you from missing any payments. And with consistent payments on time, your credit score will see an improvement over time.
You need to look into how much debt you have
When there is a high level of debt this will affect your credit score negatively. And while you may not be able to pay the debt back right away, you can work towards it gradually. You need to start with higher interest debts first. You should also pay off any outstanding balances you have. There are different methods you can try. The avalanche method is where you pay off the debts with the highest interest first but if you are not able to do this, you can try paying off the smaller debts first instead. All of this will contribute to improving your credit utilisation ratio.
The amount of credit you are using
And what you actually have is called the credit utilisation ratio. You need to have a low credit utilisation so that you are seen to be more responsible. A good rule of thumb is to have the credit utilisation below 30%. If you have credit cards, you have to be very careful about using them. It is never a good idea to max out the credit cards. And if you have a lot of credit cards with balances, you need to check with cards that have a lower interest rate so that you can transfer the balance to that. When you are trying to repair your credit score, it is a good idea to avoid opening any new credit accounts. This can temporarily lower your credit score. You have to focus more on managing the accounts you already have.