You have bad credit, big deal right?

Bad credit can affect you in innumerable ways. Applying for credit cards results in the all too common denial screen, and lenders laugh at a request for a personal loan. When you have a bad credit report, not only will it be tough to get a loan or a credit card, even when you do, the interest rates will usually be outrageous. So outrageous in fact, a high interest rate like those on payday loans can double, or even triple what you actually pay back. If these scenarios are familiar to you, it’s likely time to rebuild your credit.

In 2019, many Americans are entering their careers with significant debt. Some have federal student loans or private personal loans, others rely on credit cards for their expenses. With an economy where compensation has not kept up with inflation and cost of living, these debts take many years to pay off once you graduate.

Did you know some employers check your credit?

Another way in which bad credit can affect you is not getting hired. Nowadays it’s not uncommon for employers to review a credit report when dealing with any sort of financial or consumer data handling position. All of this rests on whether people can trust you or not based on your past dealings. Here’s a great article that gets into the finer details of what an employer can and can’t see. So, if you will ever get your finances right, it is important that you successfully rebuild your credit.

In order to do that, below are some steps that you can take.

Know your financial status

If you will ever rebuild your credit, you must know where you are presently. Having a firm understanding of where you stand financially will help you know where to improve. Knowing your delinquent payments and ensuring that your debt to income ratio is very low is a good way to start.

Resolve to pay on time

Having known your current status, the next step to take is to decide to catch up on your payment and settle all dues in time. This might be difficult especially if you already have a bad habit of paying late, or a low household income like many people. However, be reminded that your payment is on of the largest factors affecting your credit score.

Do not close credit card accounts

Contrary to popular opinion that credit card accounts, especially if you have a low credit score, are not good if you want to rebuild your credit. Rather, here’s to encouraging you not to close the accounts. More than anything, credit accounts are monitored and reported, so when you have turned a new leaf and started paying in time and clearing your debt, how do you want the authority to find out? It is true that you might be advised to close your credit card accounts, but more than anything, avoid it.

Pay down debt first

In order to rebuild your credit, it is important that you are free of debt. Alas, you cannot talk of saving until you are free of debts. So, you need to create a simple yet disciplined method to pay off your debt quickly. You might even need to evaluate and cut back your expenses. There are several debt relief options out there, just be sure to use a trusted company with the proper accreditation. We highly recommend Consumer First Financial as a trusted name in the industry.

Practice good financial habits

So you’ve turned over a new leaf and started regaining control of your debt It might take some time to see improvement in your credit score, but don’t give up, you will eventually get the desired result. Practicing good financial habits will definitely help rebuild your credit, so keep at it. Live within your means, set aside money in case of emergency and save for the future, and you will have one less thing to worry about.

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