What to Do if Your Credit Score is Bad

Has your bad credit score been stressing you? Are you finding it hard to land a job, get a loan, find a place to live or start a business because of a bad credit report? Perhaps you are afraid you might get a bad credit score soon.

Guess what? A bad credit score is not always a nail in the coffin. You can recover and make headway. While there are several downsides to having a bad credit report, there are a number of things you can do to help you get back on your feet – as fast as possible.

Here are three things you can do if you have a bad credit score:

1. Check Your Credit Report

Everyone makes mistakes, and this includes credit reporting agencies. According to a survey, nearly ten million British adults have discovered mistakes on their credit files. A whopping ten million! That is why you shouldn’t leave anything to chance. Pore over your credit report to identify any mistakes that might account for your bad score.

For instance, if you’ve gone through a Chapter 7 bankruptcy, examine all your accounts to ensure that all your former creditors were recorded as part of your bankruptcy and that all accounts show a zero balance.

Sometimes debts can be duplicated year to year or your account may even be mixed up with others. An exhaustive examination of your credit report will help ensure there are no errors. You can check your credit score report for free.

2. Get a Personal Loan

While it may sound counterintuitive, a personal loan can actually help you revamp your credit score. Here’s why: It adds a new type of credit— installment rather than revolving credit — which is positive, as long as you’re diligent about making payments.

Often, people assume that a poor credit score automatically translates to an inability to get loans. However, according to SimplePersonalLoans, “you won’t automatically be refused credit and loans if you have a bad credit score. But bad credit may mean you need to shop around a little more to find loans that offer the best interest rates. Getting the best deal means you benefit from lower interest charges so your repayments will leave you debt-free sooner.” There are loan brokers who can help you find the best loan for your situation.

3. Work on your Habits

There’s no easy way to move from having a bad credit score to a good credit score. You simply have to work hard at it. Your results won’t change if you keep doing the same thing. Again, your credit report comes in handy here. Check to see what accounted for your low score.

Did you default on payments? Did you file for bankruptcy? Did you default on loans? Did you overspend? Once you know where the problem is, you can find a solution.

There are habits that can help you ensure a good credit score. You can improve your credit score by paying your bills on time, making sure that your credit card debts are at a minimum and ensuring you only apply for credit when you really need it.

Creating a budget can help you plan the use of your finances and ensure you are able to manage your debt-to-income ratio.