A bad credit score can make it feel like you’re going through life with your hands tied. All the things you want to do to improve your life, like buying a house, getting a loan for a car, or getting a credit card, suddenly become impossible. Even worse, the more things you apply for, the worse your credit score might get.
So, can you get out of a bad situation with your credit? The short answer is yes. While it can take time, you can build up your credit score while still managing to live your life.
Improving your personal finances
One of the best ways to boost your credit is to improve your finances. First, it’s important to check your finances and see where you can reduce your spending. Getting rid of debts, for example, has a good effect on your credit score, and it has an even bigger impact on your finances.
If you have a good credit score to start with, it can be easier to reduce your debt using a debt consolidation loan. But even with poor credit, you can eliminate debt one by one using the snowball method, where you focus on paying off the smallest debt you have. Then, once it’s paid off, you move onto the next smallest, and so on. Each eliminated debt will help your credit score.
Credit score tips
As well as paying off your debts, which is the most reliable way to improve your credit score, you should also look into credit-building cards, especially if you don’t have much history. These are credit cards that are designed to help you improve your score over time.
If possible, a higher lending amount is ideal, because this means you borrow less of your total amount. You should also try to reduce the number of cards you have. Get rid of newer cards first, as this keeps the average age of your credit cards higher.
A new card will lower your score to start with, but if you keep your borrowing amount low (under 20% of your limit is ideal), it will actually help you in the long run.
Buying property with low credit
One misconception is that it’s impossible to buy property when you have a lower credit score. But if you are in a position where you could afford to buy a house, you just have bad credit, which makes it hard to apply for a mortgage, you don’t need to give up just yet.
Adverse Mortgage Advisors are brokers that do exactly what it says on the tin, which is to advise people who want to take out a mortgage but have bad credit. With the right broker, you can find a provider that is willing to provide a mortgage.
With bad credit, you’re less likely to get a great deal on your mortgage. But you can switch the mortgage in a few years’ time to get a better mortgage once your credit score has improved.
