Bad credit can have a negative effect on a person’s life. It can determine whether or not a person can purchase their own home. It can even determine whether or not a person is hired for a job opening. Overall, having a healthy credit rating is extremely important. Thankfully, Doctor-Credit.com has loans designed for people with bad credit.
1. Pay Your Bills on Time
One thing that can certainly affect your credit score is making late payments on your debt. If you have fallen into this habit, get out of it. Even if you are given a grace period, make it habit to pay your bills as early as possible. This way, you won’t end up paying them late if you have unforeseen expenses. You should be aware of the fact that your history of paying or not paying bills on time will constitute a whopping 35 percent of your FICO credit score.
2. Balance Your Debt to Credit Ratio
The next largest portion of your FICO credit score is made up by something referred to as credit utilization. This accounts for 30 percent of your score. You can keep this part of your credit score healthy by making a strong effort to keep the balances on your debt low in comparison to the credit limits for those accounts. A good rule of thumb is to keep your credit utilization under 30 percent. You should also be aware of the fact that the balances on your credit cards are reported to the credit bureaus midway through the billing cycle.
3. Develop a Strong Credit History
One way credit reporting agencies rate your credit is by examining your track record. Not having much credit history at all is actually considered a black mark against a borrower. It is a good to try to start building a credit history early. It will make up 15 percent of your FICO score. Your credit history will be measured based on when your oldest and newest accounts were opened. Try not to have any significant gaps if you want to mark well on this part of your credit score.
4. Diversify Your Credit
The different kinds of credit accounts you have will constitute 10 percent of your credit score. It’s a good idea to make sure the kinds of accounts and loans you have are a bit diversified. For example, having a mortgage and credit cards will likely be looked at more positively than simply having credit cards alone. While you don’t want to add more debt just to diversify your credit, you should do so when it makes smart economical sense such as obtaining a mortgage instead of paying rent for the rest of your life.
5. Avoid Taking on Too Much Credit at Once
It is true that the credit reporting agencies do want you to have varied forms of credit. They also punish you via your credit score if you go without credit. However, opening up too many new credit accounts at once can also hurt your score. If your applications are spaced too close to each other, you will be punished for each additional application. Instead, make an attempt to space out your applications for new accounts. This is a smart idea regardless. You may unwittingly overwhelm yourself in debt if you aren’t careful.
6. Use Your Credit on a Regular Basis
Once you have a credit card account, you also need to make sure to use it sometimes. While it may be a good idea to be tactful with your purchases, you should not be so careful that you never actually implement the credit you are lent. One of the reasons why is because the accounts that are not used may eventually be closed by the lender. This can negatively affect your credit score.
7. Fix Errors
Unfortunately, sometimes errors can negatively impact a person’s credit score. This is not fair, but it is not unheard of. This is why you should make sure to obtain your yearly free credit report and review all of the information thoroughly. If you see any discrepancies, file disputes with both the lender and the credit bureau that published the error.