How to Fix Your Credit and Improve Your Score

Posted Tuesday, Feb 21, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

You can get great deals on cars even if you have a poor credit history. However, they might not be as appealing to you. Your credit history can affect the interest you need to pay in your installments. It can also affect your down payment and whether you receive a loan.

One way to get a better deal is to hold off on the car purchase for a few months. You can use these months to build credit, fix credit, or work on your existing score. Bad credit isn’t permanent and can be fixed in a few easy steps.

The easiest way to begin is by working on a small plan. This should work on three major parts of your credit history; the past, the present, and the future. You can begin fixing the past, working on your present habits, and planning for the future today.

5 Easy Steps to Fix Your Credit Score:

1. The Past

What’s done is done. There’s no point in worrying about the past. We can only look to the future and work to build credit today. However, if there’s anything that you can fix, it is recommended to get it done as early as possible.

2. Unpaid Bills

Fixing just a few parts of an otherwise bad credit history can raise your score considerably. One thing that affects credit history the most is any unpaid bills that have been due for some time, past-due accounts, or debt that has been left unpaid.

Start clearing as many accounts and dues as possible to fix your credit immediately. Your credit history improves with every bill you pay and the responsibility you address.

3.  Credit Utilization

When on this journey, consider your credit cards. Have you been maxing out on any cards? Are you someone who spends excessively on credit cards? These habits can lead to bad credit, eventually taking you further away from a great auto loan.

Lower this amount by using a credit card only when you need it. You should also be wary of any unknown factors impacting your credit history. This includes applying for a new credit card or closing accounts.

4. The Present

You can begin to work on your credit history today by educating yourself about its many components. This is the easiest way to avoid bad credit. There are a few factors that make up the credit history;

• Payments: These include any payments that you might have missed.
• Credit: Any credit cards that you are using contribute to this factor. If you are utilizing all of your credit, it can affect your history.
• Hard Inquiries: If you apply for new credit, you may encounter a hard inquiry. This takes some points off your credit history.
• Others: The number of credit accounts you use and the types also matter. Moreover, any legal cases are also considered.
• Debt: This is the debt you have accumulated from various sources. Any loan you receive, debt on credit cards, or other money you owe impacts credit.

Learning about these factors is not enough. If you want to fix credit, you must start by keeping track of your points. Go over your credit regularly and work on it consciously!

You can also try to lean on your friends and family. Ask for help when navigating your credit. Educate yourself before you make any further decisions. If you have really bad credit and cannot apply for a car loan, consider getting a cosigner to meet your conditions.

5. The Future

One of the most important factors when trying to build credit is looking to the future. Starting to plan for the future now is crucial. Remember that the more credit cards you apply for, the more you impact your credit history.

Credit Card Application

Applying for a credit card doesn’t just reduce your score through utilization. Going through a hard inquiry each time can lead to more debt and a decrease in your points.

Credit card rejections also reflect badly on your application. If you are considering applying for a credit card, try not to do it in parallel with applying for an auto loan. Too many hard inquiries might worsen your credit history and lower your chances of approval.

A lender needs a guarantee that you will pay back your debt. This guarantee is usually provided by good credit. However, a bad credit history includes all the applications that were rejected. Regardless of whether this rejection is deserved, it can discourage the lender from approving your application.

Debt Payment, Planning, and Management

If you frequently struggle with debt, perhaps it is time to start planning and get financial help.

Step 1: Understand the Problem

Begin by identifying the issue. You can also use your financial advisors to understand the issues with your spending or the parts of your credit history that have taken the biggest hit. Work on them accordingly.

Step 2: Planning to Stay Afloat

Choose or figure out your long-term goals to avoid bad credit. If getting an auto loan is your goal, work on your credit history accordingly. You can plan it yourself or work with a credit counselor who can help you dedicate a particular amount to monthly bills.

Step 3: Getting Creative

If multiple loans are becoming a problem, you are not alone. Many people get caught up in a huge pile of debt each year. However, bringing together all those debts into one consolidated amount is possible. This way, you can reduce the interest on those loans and work to fulfill them all at once.

Final Thoughts

The easiest way to build credit is to start working on it today. You can begin educating yourself and taking small steps towards that goal. However, you must start fast if you are hoping to get that auto loan in the future.

Bad credit doesn’t mean you hold off on that car. Many car financing options can get you exactly what you need. If you wish to buy that car immediately, it is possible to get one. However, we recommend working on that credit history to avoid falling into another debt trap.