5 long term best practices for rebuilding bad credit

5 long term best practices for rebuilding bad credit

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Because your credit history can have a major impact on your life when it comes to important milestones, such as applying for home loans, student loans or new jobs, it’s essential to rebuild bad credit. This way, you’ll improve your credit score for those critical times when credit checks are run on you. Here’re five ways to turn a negative credit report around.

Start building good credit

Ultimately, your goal is to create a good credit history. You can do this by showing you’re managing your debts responsibly. Some key ways to build your credit score over the long-term include paying all of your bills on time, avoiding unnecessary credit enquiries (such as when you apply for new credit cards), and never getting cash advances on your credit card. It’s also important to regularly check information on your credit report and make sure it’s accurate. Correct any mistakes as soon as possible if not.

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‘Set and forget’ your bill payments

When you have a lot of debts it can be hard to pay them all on time, which can keep you stuck in a bad credit rating cycle. A great way to avoid adding to the problem is to set up all of your bills to be paid automatically. Arrange for each bill to be direct-debited from your account every month at the right time. This way, you don’t need to keep stressing about late or missed bills and you won’t accumulate more late payments in your credit history.

Get a debt consolidation loan

Another way to simplify multiple debts, manage your debt repayments better, and improve your credit score is to consolidate all of your debts into one single loan. By meeting this one monthly obligation on time every month you can slowly but surely build a new credit history that will reflect well on your credit rating.

Avoid court judgements at all costs

A court judgement tells prospective lenders that you not only didn’t pay your bills on time but that a court had to make you repay your debt, which will be seen by lenders as a big red flag. Also, even after you have repaid the debt, a judgement can remain on your credit report for several years. Do everything you can to avoid a debt getting to this stage in the first place because it will have a major impact on your credit score.

Always pay more than the minimum

If your credit card balance is high and you are only ever paying the minimum repayment due, this will suggest to lenders that you are under financial stress. What’s more, only paying the minimum makes it that much harder to get out of debt and improve your financial position. Try to always pay more, even if it’s just a little bit more, as this will also help you build a good credit history.

If you need to repair your credit report, an expert credit restoration company like Credit Repair Australia could help remove any black marks and restore your credit report.

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