bad credit

How To Repair A Bad Credit Score

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Is your poor credit score stopping you getting better forms of credit? You’re not alone.

Over 30% of Americans, for instance, have a bad credit score that limits their access to credit cards or loans with affordable interest rates.

A bad credit score doesn’t mean you’re out of options, but it can stop you getting healthy forms of credit, forcing you to rely on subprime interest rates and difficult repayment schedules.

But do you know how to fix the problem?

Well, don’t worry if you don’t, because we’ll talk you through it. Here are some of the biggest steps you need to take to repair a poor credit score.

Review Your Credit Report for Errors

It’s important to regularly review your credit history to check for any mistakes by lenders. Even one misinformed late payment on your credit history can lower your score.

Lenders aren’t infallible, and if you feel they’ve made a mistake, you can take steps to dispute it through credit reporting agencies like Experian directly, or by complaining to the lender themselves.

It’s also important to review your credit report for any signs of fraudulent accounts, as these could also be having a negative impact on your scoring.

Reduce Your Debt and Keep Balances Low

Take steps towards clearing your debt if you want your score to be healthy.

If you already have a lot of debt, taking on more won’t help your credit score. By reducing your debt to household income ratio and keeping balances low on credit cards, your credit score will begin to improve.

The first step to reducing your debt is ensuring you’re no longer reliant on it. Having a proper financial budget can help you identify poor spending habits and help rein in spending, making it easier for you to pay overdue bills.

Be Consistent With Payments

The credit reporting agency Experian reckons that your payment history has the biggest impact on your credit score. It’s important, therefore, to be consistent in your repayments.

This is especially important if your credit history is poor. Showing that you’re starting to get back on track with a consistent history of payments will improve your score over time.

A few missed payments will set you back, however, so it’s important to keep to any budget you have and make your bills a priority.

Don’t Apply for Credit Too Often

If you get rejected for credit, stop. If you apply too often, it will show potential lenders that you are in financial distress, which makes you an unappealing risk for them.

Apply for credit accounts only when you feel they are necessary and don’t open too many, too soon. Too much credit all at once is another red flag for lenders.

Make sure to shop around for credit, too. Applying for credit cards through services like EnjoyCompare can help get you the best deal for your current credit score.

Repair Your Bad Credit Score Today

Debt isn’t something to avoid, but bad credit certainly is. No one wants to be paying huge interest rates if they can help it.

This is why taking the steps to rebuild your credit history and get a good credit score is important. By lowering your household debt and showing that you’re consistent with repayments, you’ll be more likely to be approved for credit in the future.

Why not build a better credit score and a better you by reading our guide on effective habits for self-improvement?

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