September 28, 2022

4 Steps To Rebuilding Credit in a Secure and Consistent Way

Due to the economic downturn at home and abroad by the COVID-19 pandemic, many people are currently finding themselves with bad credit scores. This, in turn, is making it increasingly difficult for them to apply for loans and other financial options. If you find yourself in this position, you need to start working ASAP to rebuild your credit score, as this may significantly affect your future.

Rebuilding your credit score isn’t very difficult, but it is time-consuming. So if you’re expecting instant solutions, you will be sorely disappointed. But if you’re willing to put in the hard work, here are four of the most common ways to rebuild your credit score securely and consistently.

  • Check Your Reports 

If you relegate your financials to your bank or an accountant, it might be time for you to check your reports. You should check all information on your credit usage for the past decade or however long you’ve been using the card if it’s less than ten. Many people have the habit of not looking at their reports and bringing their spending in check when they should have.

As a result, they often find themselves shocked by their bad credit score when the news finally hits them. Pinpoint all the bad expenses you’ve made with your credit score and eliminate them as soon as possible. Unless you cut down on these bad expenses, you won’t be making any significant progress with your credit score rebuilding.

As a rule of thumb, you should check your credit reports every 2-3 years to make sure your bad expenses aren’t getting out of hand.

  • Fix Errors

Once you’ve eliminated the bad expenses from your report, you should focus on fixing errors you found. Credit reports often have a lot of accounting or entry errors which can negatively affect your credit score. Fortunately, the problems can be rectified by filing a dispute with the requisite evidence.

Fixing the errors can often give your credit score a good boost, but only if there were a lot of errors in the report in the first place. If not, then whatever boost you gain by fixing the errors is still a win. Make sure you’re filing the dispute with the help of a professional.

  • Make Payments on Time

Most financial experts agree that the best way to fix your credit score is to make your payments on time for a simple reason- payment history accounts for 35 percent of your credit score. While paying on time might seem like a no-brainer, most people get bad credit scores because for this simple reason.

To successfully make your payments on time, you need to first develop the habit of making your payments on time. If you don’t trust yourself with your expenses, then autopay can be a good option for you. This system deducts your credit payments immediately from your salary when it hits your bank.

Making your credit payments on time is especially important because late payments can stay on your credit report for up to 7.5 years, which can significantly impact your financial options down the line. Since they take longer to recover, making more delayed payments is just a bad idea.  

  • New Credit

Last but not least, you can apply for new credit if your credit is so bad that it’s beyond recovery. Credit builder loans like 500 Credit Score Credit Cards for low credit helps people with bad credit score improve their credit score.

But getting secured card assistance is not easy as you will have to submit a lot of documentation such as bank membership, proof of income, loan papers, and more. The company takes over all your credit, and then you keep paying back to them slowly over time.

Make sure not to blow this second chance by making your payments on time every month. The payments for a secured card are directly reported to the credit bureau, and any negative report at this point won’t bode well for you.   

Recovering Will Take Time

Building back your credit score to an acceptable credit range is not easy, as people have been doing it for a long time since credit cards were introduced. But with the right approach and mindset, you can get your credit score back to the acceptable range or even better. Just develop some sound financial habits, and you won’t have too much of a hard time. 

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