How to Fix Your Credit Score
Credit score is important when it comes to your financial standing and your life. Not only do banks and credit card companies look at your credit score to determine your interest rates on loans, home mortgage, new car purchases and new credit accounts, but even landlords and employers use it to gauge your financial responsibility. You credit score can affect every aspect of your life so it’s important to have a good number.
With the tough economic situation here in Canada many people are facing mounting debt problems due to increases in spending and/or decreases in income. Mounting debt can easily affect your credit score if you don’t pay bills or don’t pay them on time. Once your credit rating has dropped it takes a focused effort to get it back on track.
Stop Credit Rating Drop
If your credit score is lower than where you need it to be the last thing you want is to make it worse. Use accurate monthly budgeting to ensure you at least pay the minimum monthly payment on all of your accounts, including both regular bills and debts. This will at least ensure your credit rating will hold steady.
Start Paying Off Debts
As you budget try to find a little extra money each month to put towards paying off your debts. The more debts you pay off the better the affect on your credit score. Focus the money you free up in your budget on one account at a time—either the smallest debt or the debt with the highest interest rate.
Don’t Max Out Your Current Accounts
It can be tough to do, but when you’re building your credit or repairing your credit score you need to curb spending to prevent reaching the maximum balance on credit cards. Maxed accounts with high interest rates will hurt your credit rating and leave you without any available funds in case of emergencies.
Don’t Get Additional Credit Cards
If your credit score is already low it’s likely you’ll only qualify for credit cards with high interest rates and/or hidden fees that are only going to make your credit problems worse. Don’t apply for any new credit cards until you’ve paid your existing debts and started restoring your credit score.
Use a Debt Management Program
Many people think enrolling in a debt management program with a credit counselling agency will hurt their credit score, but it’s quite the opposite. Successfully completing a debt management program will improve your credit score by improving payment history and your debt-to-income ratio. It also proves to creditors you take debt repayment seriously, so they are more likely to offer better credit deals when you’ve completed to the program.
If your credit score is only fair or even bad a debt management program may be the first step you need in rebuilding your credit. Call to speak with a trained credit counsellor today at 1-800-656-3920 for a free debt consultation or fill out our free debt analysis form at consolidatedcredit.ca and one of our counsellors will call you shortly.
