Credit score seems to rule people's financial life. A bad credit history may seem like a big obstacle in one's life that one would need to cross at many stages. If you find yourself in such a situation you don't need to panic. There are ways in which one can survive bad credit. Let us see how to overcome situations where the credit score is used to evaluate your credit worthiness or win your trust. We have also highlighted some measures that you can take to improve your bad credit score.
Taking a loan - Most well-known banks and financial institutions turn down the loan application of people with bad credit. But bad credit is a very relative term. Some lenders find it an opportunity to make profits by lending to people with bad credit. They are ready to take the risk of lending to borrowers who do not have an impressive past credit behaviour. But for doing so, they charge a high rate of interest. If you can afford to bear the interest burden, you can borrow from such lenders in case you are not getting approved at leading institutions,
Getting a credit card- When you have a bad credit, you may not be able to qualify for a credit card especially those with rewards and benefits. At such times your focus should only be on getting a card to rebuild your credit history. If you charge a few expenses every month and repay the full balance at the end of the billing cycle, then it helps in building the score. A secured credit card will serve this purpose, and the best part is that it doesn't require you to have a good credit score to qualify for one.
Many potential employers do a credit check before hiring an individual. This is especially true for finance related job positions. If you are afraid that a bad credit history may hinder your appointment to the new job, then it is best to be honest with your employer. Explain the reason for your past mistakes, your learning and how you are trying to improve upon them.
Your prospective landlord may also check your credit report to gauge whether you are responsible with your payments. If your credit history is not impressive, you can use other means to win their trust. Offer a higher security deposit. Pay three month’s rent in advance. Ask a friend with a good credit score to co-sign the rent agreement with you. There are several such means that can help you deal with this situation.
Once you have a bad credit doesn’t mean you will stay in that condition forever. With good discipline and timely payment of debts your score can again climb high. Begin by checking your credit report to see which factors are responsible for the bad credit situation. Here are some ways you can get your credit life back on track.
Budgeting- One needs to control one's spending behaviour and follow a good budgeting strategy. Only when one has his finances under control can one think of coming out of a bad credit situation.
Take a bad credit personal loan – There are several private lenders who offer loans to people with bad credit. One can use these funds to consolidate the debts. Pay off all the accounts in which you have defaulted previously so that you come to terms with your previous lenders and the account does not show "Settled" or "Written off" anymore. A "Closed" account is seen in a much better light and helps in getting out of the effect of previous mistakes.
Make payments on time- Payment history contributes to 30% of your credit score. If you start making EMI and credit card bill payments on time, then new responsible credit behaviour will overshadow your past mistakes. Charge only those expenses to your credit card that you can pay at the end of the month.