4 Proven Ways To Rebuild Your Credit
It can be quite a task to restore your credit than starting from scratch. You are seeking to convince lenders and issuers of credit cards that you are very likely to make future payments as agreed, previous slip-ups on your part or disasters you had nothing to do with.
Before you begin to rebuild credit, it’s important to know where your starting point is. There are many websites that can do your credit check and let you know your credit ratings for free. Once you know where you stand, you can begin to set some small, achievable goals for yourself.
Don’t close old accounts
It’s usually a bad idea to close older credit card accounts. You might think of this step as cleaning up your credit. But in the case of credit cards, it usually helps to hold on to older accounts for a long time, which gives you more established credit history. If your older card charges an annual fee, ask the issuer to switch to one that doesn’t have a fee, while keeping your history.
Get new credit
If bad credit has left you without any open and active credit accounts, you’ll have to get at least one new account on your credit report. You may be afraid to use credit cards again, but refusing them makes restoring your credit more difficult. Having a low credit score makes it hard to get approved for a credit card from a major bank. Fortunately, you still have some options, even with poor credit. There are many instant loan apps like SmartCoin, from where you can take small loans and do the timely repayment. It will help in improving your credit score.
Become an authorized user
You can ask someone to add you as an authorized user on a credit card. Just from getting on the account, your credit score benefits. For authorized users, a few cards allow primary cardholders to set spending caps, which may help the account holder feel more at ease including you. You could also ask someone to add you without actually giving you a card or card number.
Being an authorized user can also hurt your score if the account holder doesn’t pay the bill on time, so ask someone with good credit habits.
Build better credit habits
To build new credit, you must replace your credit-damaging spending habits with financially sound ones. You could end up with compromised credit again if you continue the same patterns. In order to boost your credit, make an attempt to avoid spending on things you can’t afford, paying only the minimum, and skipping credit card fees. Improving your credit score means remaining well below your credit limit and paying on time, preferably in full, for your credit card bills.
Old habits might be more comfortable and hard to overcome, but remember that they led to you having bad credit. Improving your spending habits will help raise your credit score.