3 STEPS TO RECOVER FROM BAD CREDIT

By Andrea Marks

The new year is an opportunity for a fresh start in many aspects of our lives. Improving your financial health can be a meaningful resolution you set this year, especially if your credit needs some attention. Use the new year as an opportunity to reset your financial habits and set a realistic goal to improve your credit score with the following tips.

UNDERSTAND HOW CREDIT WORKS AND MONITOR YOUR CREDIT REPORT

Educate yourself about how credit works so that you can effectively manage it to the best of your ability. Remember that you are in control of your credit. Focusing on financial literacy will help you make smarter choices and positively affect your credit score if you take the proper action. Having a good credit score is vital when you decide to buy a house as it can help you qualify for a loan and get a better interest rate on a loan. So, take charge and monitor your credit report. Companies like IDIQ offer industry-leading identity theft protection, credit monitoring and data breach management right at your fingertips, providing you with financial peace of mind and making you an informed and proactive consumer. Then identify areas that you can improve on and hold yourself accountable. Know that the number of credit cards you have is not a determining factor in your credit score—it’s how you use them.

PAY ON TIME AND MANAGE YOUR CREDIT UTILIZATION RATIO

To avoid late payments, set up automatic bill payments and create a monthly bill payment calendar to help you keep track of everything that needs to be paid every month.
Late payments can negatively impact your credit score for up to seven years, which means that paying your bills on time is the most important thing that you can do to positively impact your credit score.

If you are late on a payment, act swiftly; late payments don’t automatically impact your credit score until they are at least 30 days overdue. If you have a compelling reason why you cannot make a payment on time, call the company and their representative may accept a reduced amount, put you on a repayment plan, or they may be able to temporarily stop payments without you being late. Keep in mind that the recommended credit utilization ratio is at 30% or below. If your credit utilization ratio is too high (when your credit card is close to the limit), it will negatively impact your credit score.

PAY OFF EXISTING DEBT

Using your credit cards and responsibly managing your debt is what builds your credit score. Too much debt can become difficult to manage especially if unexpected expenses come up. If you want to tackle your debt, create a repayment plan as your new year’s priority. When you pay off a credit card, don’t close out the account, let it age because it is one of the things that helps you get higher credit score.

Your credit score determines whether lenders and creditors approve or deny your loan and credit card applications. Continue to educate yourself about how you can positively impact your credit score and utilize the newly gained knowledge. Paying bills on time, paying down debt, and monitoring credit reports are all things that can help you reach your desired credit score. You don’t have to be rich to have great credit—the trick is in living within your means and continuously proving that you can manage your debt. And remember, to help you prevent fraud, you can sign up for credit and identity theft monitoring with IDIQ. Offering a variety of protection packages for different budgets and needs, it helps to have a team of experts to support you.

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