Keeping on top of your finances can seem easier said than done, especially if you made mistakes in the past that your credit rating won’t let you forget about. From missed payments, arrears to even defaults or CCJs, your whole financial history is there to be seen by lenders. The difficulty is, once these financial blemishes appear, they will influence how lenders will treat you as an applicant, with some declining your application before it begins. So how can you improve this and show to a lender when you need a loan that you can afford it? Here are some ways to help you in the short and long term.
Find the Right Lender
If your credit score is low, you already know there will be some lenders unable to help, narrowing the number of lenders you have to choose from. To make things easier, finding those lenders who are specialists at helping those with bad credit can help save time and effort when searching online. Depending on the type of short term loan you require, you’ll find the chances of being accepted for the amount you need will improve and also help you avoid multiple declined applications in the process. Online options including payday loans for bad credit are designed to do exactly that, provide approval where other traditional lenders cannot. All you need to do is demonstrate your affordability for the loan amount and term you require, and this will be focused on during the application rather than your history of bad credit. Whilst approval for the loan can’t be guaranteed, your chances of being accepted will be greatly enhanced.
Check Your Credit Report
Knowing why you have bad credit is the best way to start to improve it, so checking your credit report should be high on your list. Most credit reference agencies will highlight the positives and negatives on your report so that you can quickly understand what’s bringing your credit score down. If you have never checked your credit report before, this will shed light on what has happened in your financial past to influence your current rating and help you determine what to do next. You may find quick fixes within this, such as updating an old address or removing any inaccuracies that are having a negative impact. Whilst inaccuracies are rare, they can happen, so it is best to check and report them as soon as possible.
Start Better Credit Habits
As well as resolving any outstanding issues such as missed payments or unsettled accounts, beginning better financial habits will help to slowly improve your score. Sometimes the reason someone has bad credit is because they have no financial history. With no loans or credit agreements in your name in the past or present, potential lenders will see this as a risk due to a lack of information about your financial trustworthiness. Small things such as opening a bank account, a small loan or overdraft can start to build this credit picture, even a mobile phone contract or similar. Start with small amounts you can comfortably afford and settle in full to show a credit footprint that is positive rather than negative.
Small Steps to the Long Term
If you are someone with plenty of financial history but periods of difficulty maintaining or settling credit agreements, you’ll also need to start small again and build that trust. It may take time, but these small steps will eventually lead to bigger improvements in your score. The longer you then go without any issues and a proven track record of maintained finances, you’ll reach a good to excellent score in no time, but how long it will take will differ between individuals. The time and effort put in is worth in the long-term, opening you up to different borrowing types such as mortgages or higher value personal loans, credit cards and more.
Keeping all of the above points in mind when finding ways to improve your bad credit score will keep you on the right path, eventually leading to a healthy financial future.