Having a bad credit rating can prove to be a millstone around our necks. Closing the doors on much of the cheaper credit currently available, the credit which is available will prove to be more expensive and in some cases, quite a risky proposition.
What can be done to halt the free fall into the credit rating abyss and return your rating to the levels of its former glory?
Below we have identified 5 proven steps which can be followed to get things back to the level that they should be.
Step 1 – Assess Your Financial Situation
No-one enjoys looking into the full extent of their outstanding debt, but this is a crucial step if you are going to stand any chance of understanding your financial situation.
Go through everything with a fine tooth comb to find out how much you owe, who you owe it to and how much you are being charged for each debt. This will help you to prioritise your repayments.
Step 2 – Make a Budget
Once you have ascertained the total level of your debt, the next step is to work out a list of your outgoings and compare it with the how much money you have coming in.
Some tough decision will need to be made with things that you need taking priority over things that you want for the foreseeable future.
Any extra money which you may find can be used to make additional payments to your debt.
Step 3 – Check Your Credit Report
Make sure that you have a good look at your credit report. It is unusual but not unknown for reports to contain errors relating to outstanding debt.
If you find anything that you believe to be incorrect, make sure that you follow it up. By removing any inaccuracies from the report, you may be able to nudge your credit rating back up.
Step 4 – Start Bringing Debt Under Control
It is important to get a handle on your payments and total debt. If you are having difficulty keeping up with credit card bills, get in touch with your card issuer to explain your situation and try to negotiate a payment you can afford.
Once you brought your debt back under control, it is important to keep a balance of less than 30 percent of your available credit limit.
It is also important to avoid opening new credit accounts just to increase your available credit or applying for multiple credit cards over a short period of time. Both of these will have a negative effect on your credit score because of the imprint they leave on your credit report.
Step 5 – Be Patient
There are unfortunately no quick fixes in regards to credit reports. To improve your credit rating, it is crucial that you demonstrate that you can follow the steps above and stick to them for a prolonged period of time.
By following the steps above, you will be able to make the moves necessary towards repairing your credit rating.
Bio – Amanda Gillam
I work as a blog writer for a finance company called www.solution-loans.co.uk which specialises in Guarantor Loans. I hold a degree in financial management and enjoy writing about a variety of topics including finance, transport, travel, sport and business.