By David Pilley on November 8, 2010
.jpg.aspx) Your credit score can affect whether or not you get a loan, and it can also be a factor in determining how high the interest rate is. If your credit is bad, don’t be dismayed. Poor credit is just a temporary thing if you are responsible with money. You can be proactive in going from bad to good.
The simplest thing you can do is get a copy of your credit report. This is a layout of your credit history and how you have handled your accounts. It will list your personal information, specific accounts, and any balances you have on your accounts. It is possible that errors will show up on the report, so take a good look and report the possible errors to your creditors. Just one wrong amount could be the difference between having prime credit and subprime credit.
Once you determine everything to be accurate on your report, take action. I know I sound like a broken record when saying it, but make your monthly payments, and make them on time. If you can also make more than the minimum monthly payments, do this, too. The lower your balances are, the more available credit you have on your accounts, meaning the more your credit score will improve.
Sheer numbers will hurt your credit, too. Having a high balance on multiple accounts is much more detrimental than having a high balance on just one account. You should look to close one of your multiple accounts, especially if it’s one that you don’t use often. Make sure to pay off the balance first. If you close the account without paying off any remaining balance, your credit could actually get worse.
Also try not to open new accounts or inquire about new credit lines. You’ve got bad credit on your already existent accounts, so trying to open more accounts will only hurt your credit.
If you can, start purchasing goods with cash rather than solely by credit card. It seems elementary, but there are no extra fees on cash. Remember that credit cards may charge transaction fees if you use them at ATMs, overseas, or some specific companies.
When you have paid off the balances on your credit cards, use the cards responsibly. Make sure you are not late on monthly payments, especially with the cards you’ve had for the longest time. Being responsible with an account you’ve had for years will look good to creditors, and your credit score could improve.
Only when you’ve gotten your balances under control can you think about opening any new lines of credit. Having bad credit is a test to your character, and everyone has moments of trial. If you keep your head up and, yes, make payments on time, you will be back on track to having a good credit score.
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