(NewsSpace.com) – Your credit score makes a huge difference. With poor credit, you may struggle when trying to rent or buy a home. Choices for a reliable vehicle may also be limited if you only have access to high-risk loans with bloated interest rates. Insurance companies may also run your report to calculate what kind of risks you take, which could impact your premiums. A low score can have serious adverse effects on your quality of life. So, here are three ways to increase your rating and start building a positive history moving forward.
First and foremost, get your payments in order and find a way to make them on time. Debts reported to credit bureaus aren’t going to go away or get better without action. Having a history of on-time payments is essential.
Don’t ignore the problem if you can’t meet your commitments. Most creditors are willing to work with their customers to catch up on missed payments, move due dates to better correspond with paychecks, or even lower the total amount due each month.
7 Ways to improve your credit. https://t.co/ZpPM8y2RcL
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Next, you should apply for a credit card. If you have bad credit, secured cards can help you get started. In most cases, you’ll have to pay a security deposit to open the account, which will likely feature a very low limit. Providers may offer increases over time if you use the card responsibly and pay the total balance off each month.
The worst thing you can do when you get a credit card is maxed it out. Carrying a high balance drags down your debt-to-credit ratio — the amount of debt you hold versus the total amount of credit available to you at any given time. That will cause your credit score to fall. Instead, always try to keep your utilization under 30%.
Finally, get a copy of your credit report and look for derogatory marks, such as owed amounts currently in collection. These can severely impact your score. If you find any such entries, contact the company currently holding your bad debt and pay it off. Often, you can settle with the debt collector for less than what you originally owed.
These simple steps will help create a path to obtaining a higher credit score.
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