Improving your individual credit score helps you get financing without the assistance of a co-signer, who is someone with good credit who agrees to apply for a loan with you. Bad credit can result from delinquencies, excessive debt and other poor habits. But solutions can help fix credit problems and slowly increase your score.
Credit Delinquenices
A major key to solving personal credit problems is changing the way you manage your bills with creditors. Every late payment and every missed payment shaves points off your personal credit score. And if you continue to pay bills late or completely default on credit cards and loans, your score will drop and stop you from getting future financing. Managing credit and paying bills necessitates a measure of organization and good budgeting. Plan purchases in advance, and review how much you can afford to spend on extras such as a entertainment. Pay priority bills first, and if you have disposable income, spend this income in moderation and keep some for savings. If necessary, schedule automated bill payments to avoid lateness.
Lower Debt
Excessive spending can bring on high credit card balances, and carrying huge balances also hurts your individual credit score. Solve credit problems related to debt by using cash instead of credit, and resolving to keep your balances to a minimum -- less than 30 percent of your credit limit. Tips to help solve debt include paying more than your minimum, taking money from savings to completely eliminate the debt, and, if you use credit, paying off new charges every month.
New Account
Open new credit accounts with care, and don't send in several credit applications within a short period. Looking for the best rate on a car loan or mortgage loan are good reasons to shop around and contact multiple lenders; these inquiries don't affect credit scores as badly as applying for multiple credit cards (bureaus view shopping for loans as one inquiry). On the other hand, regularly applying for pre-approved credit cards or frequently submitting applications for store credit can take points off your score and stop efforts to increase your score.
Discuss Financial Problems
Creditors and lenders are here to help you. Rather than let financial problems or other issues affect your good standing with the company, contact your creditors and lenders for assistance if you can't make a payment because of unemployment or because you're taking time off from work to deal with an illness or injury. Mortgage companies offer loan modifications and forbearance options to eligible borrowers, and many other lenders permit skip-payment options to assist borrowers in distress.
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