For most people, borrowing money is relatively easy. With most loans, credit cards, and other lines of credit now available to apply for online, you could have your new card sent out to you within days, or money deposited in your bank account within minutes – without even having to leave your home. However, what isn’t always easy is repairing the damage that a lot of debt can have on your credit score.
Whilst some credit that you’re able to manage responsibly can be a good thing, there’s a fine line between just enough and too much when it comes to debt. And if you’re struggling to keep up with repayments or don’t have enough money left to live on after making repayments, you’ve hit a problem. Thankfully, cleaning up your credit is possible – here’s what to do to improve yours.
Having a lot of small debts outstanding can look bad on your credit rating, and if you’re paying them all off month by month, it can be draining on your bank balance, too. Repaying as many of your small debts off in full as possible, if you can, is always a better option compared to paying off the minimum amount every month.
If you can’t afford to do this, it’s a wise idea to look into a debt consolidation loan – you can use this money to pay off several small lines of credit, and in turn, you’ll only have one open account compared to many.
Did you know that errors on your credit report could be leading to an unnecessarily low score? Go through your credit report thoroughly and question anything that you don’t think should be on there.
Sometimes, human errors can be made, which could lead to negative factors on your report, for example, if an account that was closed is still showing as open, or if a payment has been recorded as made late, when in fact you paid it on time. It’s also a good idea to keep your own records of when you make repayments and settle account balances, to make it easier to check for discrepancies.
If you’ve ever had debt that was passed on to a collections agency, this will be more damaging to your report than almost anything else. They are often the most complicated factor on a credit report, however, there are steps you can take to clean them up and get as many taken off as possible.
First, check the date – if the debt is past the reporting limit, which is generally seven years or more, the collections agency cannot list it and you can start a dispute to have it removed. You should also check the information listed – if the agency has listed the wrong date, amount, or other information, you can also dispute this and appeal to have the listing removed.
If you want to rebuild your credit score, start by cleaning up any negatives and errors first.