WASHINGTON, March 15, 2017 – Having a bad credit history, a poor credit rating or both will get you locked out of the U.S. financial system, assuring that you, your needs and your financial obligations will be off the radar screens of most financial institutions. In other words, you’ll find it difficult if not impossible to get credit.
Worse, should you somehow manage to get a consumer loan or credit card, you will end up paying huge fees and interest rates, particularly in comparison to those with good credit.
Even more problematic, insurance companies, rental property owners and even credit card lenders may take advantage of your bad credit, which gives them an excuse to charge you more fees and higher rates.
But it is not impossible to gradually improve a poor credit rating, remove any negative history and fix what’s weighing your score down, although it is always best to avoid bad credit in the first place. Likewise, however, it is wrong to think that you merely need a good credit rating if you plan to borrow money.
In short, even if you don’t intend to borrow, it is good to maintain good credit. You can achieve this goal by following three relatively simple steps:
Review your credit report
Your first step is to obtain your current credit report. Check it carefully and make sure all the information it contains is accurate and up to date. The reason for this is simple: the reports can be wrong or contain incorrect information from time to time. For instance, your report could list accounts that don’t belong to you or items that may have expired yet still remain on the list.
If you find any error, you can dispute it by writing a to the credit bureau in question. You will need supporting documents to file the conflict correctly.
You can get your credit report from your bank or any number of credit agencies or services, such as Experian, FreeCreditReport.com or the often-advertised CreditKarma.com. In the process of obtaining your credit report, examine the instructions for obtaining the report carefully and be sure to read the fine print to ensure the report is free and that it won’t affect your rating just to ask for the report. By law, you are entitled to one free credit report each year from each reporting credit rating service.
Catch up on late payments
If you are ever late with payments on any credit card, service or loan, start paying them on time. If you do so, the flag in your credit report or reports will eventually be removed. (But check at some point, just to make sure.)
If you are unable to make timely payments, talk to the creditor or creditors involved to see whether you can get an extension of the due dates or negotiate a reasonable repayment schedule.
It might surprise you that many creditors are willing to compromise on this issue. This is because they know it is better for you to pay when you can than not pay at all. It is also important to always pay “something” even if you can’t pay the full amount. Whatever you arrange, however, make sure you stick to the plan you and the creditor have agreed upon.
Choose healthy credit habits
Since it can be hard to fix most credit mistakes, your best option is to try to avoid them altogether in the future.
Start today to manage your finances to avoid creating debt you cannot pay off on a monthly basis, which is the chief cause leading to high indebtedness for many individuals. Although it requires some discipline in a society that doesn’t often seem to appreciate or reward discipline, what used to be called “living within your means” is the only long-term strategy for avoiding long-term indebtedness, the key element in avoiding bad scores in the future.
Make a point of paying your debts on time and avoid borrowing when you realize you can’t afford the payment plan. Also, don’t apply for credit cards if you don’t need them.
You can help yourself by setting up payment reminders to help you in making timely payments each month. This is a great way to ensure that you are living debt-free. You can often make arrangements with your bank to send you emails or text message reminders when your payments are due.
Alternatively, an increasingly popular way to avoid irritating and needless late fees is to request that your bank set up an automatic payment plan for selected creditors. Such plans, once set up, automatically debit your account on a specific day each month and (for the most part) electronically transfer your payment to a listed creditor or creditor at that time.
However, the very best thing you can do is to avoid spending more money than you actually have. Recognize the difference between needs and wants, and only spend money on what you need, like food, insurance, housing and transportation for starters. Put off that vacation until you can afford it.
Longer term, if you find you’ve accrued multiple credit cards and notice that you’re teetering on the edge of accruing unmanageable debt, try to consolidate any debt carried on those cards to another card charging a noticeably lower interest rate card if you can before you get into trouble. (But be careful: Some of these cards charge an extra fee or a higher rate on debt transfers.) After you’ve done this, make the highest payments you possibly can on that one card.
Establishing credit discipline is not easy when you’re trying to do it for the first time. But the earlier you establish and maintain credit discipline, the easier your life—and your credit—will become.Click here for reuse options!
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