Dealing with a tarnished financial history is rough, and it can be overwhelming. Sadly, this is not an uncommon situation for many Americans. What can you do to get back on the right track?
The experts at Drivers Lane know what it takes to rebuild and repair damaged credit. If you are one of the many Americans looking to take control of your finances and credit situation, here is some information to help you.
Check Your Credit Report
Did you know that you are entitled to a free annual copy of your credit report from each of the three major credit bureaus? Your first step is to request your credit report from each of the three reporting bureaus: Equifax, TransUnion and Experian. Use these reports to spotlight what areas of your finances need attention, such as paying bills on time or carrying too much debt. If there are errors that are causing a negative effect on your score, dispute them directly with the bureau or reporting institution.
Pay Bills on Time
Timely repayment of debt is one of the primary ways lenders determine your creditworthiness. Automatic payments are an excellent way to make sure your responsibilities are habitually attended to. This is also a great way to save money for the next step, because you are no longer throwing money away on late payment penalties.
Pay off Outstanding Balances
When you are using a high percentage of your available credit, you are seen as a high-risk borrower because it indicates that you are overextended and are more likely to make late payments or miss them altogether. If you have a high credit utilization ratio, it may be difficult for you to secure new credit. It's best practice to keep your credit utilization under 30%, and there are a couple strategies for how to best attack your debt:
- Pay down your lowest balance(s) first. That will give you the confidence you need to keep up the good work.
- Pay off the high interest balance(s) first. While it may take more time, this technique will save you more money in the long run.
Secured Credit Cards can be Good
If you don't have any credit accounts, a secured credit card is the perfect tool for you. These operate exactly like regular credit cards, except that they are backed by money that you must deposit into an account. You receive a card with however much you choose to deposit as its credit limit, and then you can go about using it as you would a regular credit card. If you keep the utilization low and make every payment on time, it should help you boost your credit score. Make sure that the creditor you use reports to the credit bureaus.
Build Good Credit, Not Unnecessary Credit
Not all credit is bad credit, and installment auto loans are suggested by experts as a good way to build a strong credit profile. If you need a car, your bad credit doesn't have to hold you back if you let Drivers Lane help.
We've teamed up with a nationwide network of car dealers that can get you approved, sometimes with little or no money down. Get started today by filling out our secure and obligation-free online application.