How to improve a bad credit score

A bad credit score can feel very restricting as it can affect our ability to purchase so many things. Here’s how to improve it.

Though it can feel like your hands are tied when you have a bad credit score, there are some steps you can take to help to improve it. Take steps to improve your credit score today and take the time to learn how to be more financially secure.

What is a credit score?

Your credit score is a number between 300 and 850 that denotes how good a borrower you are. The higher the number is, the better and more trustworthy you will appear to be. This is a key factor that many lenders will take into consideration when reviewing any application you make for a loan.

Trethowans
Trethowans

After all, they could be lending you hundreds of thousands of pounds – especially if this loan is for a mortgage or some other big payment, and so they want confirmation that you will indeed be able to pay it back.

If you have accumulated a lot of debt through credit cards or you have defaulted on loan payments in the past, this will unfortunately lower your credit score and you won’t look as trustworthy. This can make it difficult for you to secure the capital that you might need and you won’t be able to complete that purchase.

So, how do you go about improving a bad credit score? Here are some steps you can take.

Commit to a plan

Turning a credit score around is not something that you can do overnight. You are going to have to put time and effort in to improving it to convince lenders that you have changed and you are now more financially stable. A plan and a strategy will be needed to make sure that you get back on track successfully.

If you haven’t already, this could be the perfect moment to overhaul your wider budgeting too. There are many techniques that you can use to master your spending to ensure that your money really is working for you.

By getting a better group on your everyday spending, your control over your bigger payments and aspects of money management will also be improved, and all of this will work together to create an improved credit score for you. 

Consolidate your debts

If you have a bad credit score, you might have several debts spread across different areas. Bringing them all together into one place can make things much easier for you to manage. 

For example, you might have debts spread across several credit cards. You need to consolidate your debts and bring them all onto one card so you can easily pay it off and work towards improving your credit score. Want to know how much will paying off credit cards improve score? This article can explain it and help you to understand how it works. 

Though it can be scary to bring your debt together into one place, it can make things much easier to manage. Take the plunge and sort out this key step so that you can then move on and create a plan that can benefit your finances even further. 

Make sure you pay your bills on time

You are doing all of this work to ensure that an improvement can be seen with your credit score, and so you need to make sure that you are not holding yourself back accidentally. One of the most crucial things that you need to do is make sure that you are paying your bills on time.

This could be one of the key reasons as to why you are struggling with a bad credit score in the first place. You should have a plan in place to help you manage your debt already – now is the time to ensure that you are putting it into action correctly.

There are many ways in which you can do so, so it is just a matter of finding out what works for you. Some of the best can be as simple as setting up notifications on your phone to make those payments. You might even want to automate things where possible by using standing orders and other tools. Whatever you choose, just make sure that your bills are indeed getting paid.

Avoid new hard checks where possible

When applying for loans, your potential lender will have to inquire as to what your credit score is in order to be able to gain the fullest picture as to what your finances might look like. This will take two forms – hard checks and soft ones.

Soft ones will not affect your credit score in any way. They are often the types of check that you will make when looking at your own score. It will always be clearly stated whether you are making a hard or a soft check, so make sure that you know the difference between the two. Some lenders will also make soft checks as these are usually part of preapproved contracts. 

However, they might also have to make hard checks. These are a key part of evaluating you as a borrower. The more hard checks that are made, the more of an impact will be had on your credit score. For this reason, you should never try to apply for a load of financial products that use hard checks all at once. If you have a rejection, find out why and work on your score before making your next application.

You can improve your credit score – even if it’s poor right now

A bad credit score can really feel like your hands are tied when you are trying to move forward and acquire a high-ticket item that could improve your quality of life. However, there are plenty of steps that you can take to improve your credit score, no matter how poor it might be when you start.

Good financial health is a must for many. Take the time to sort yours out so you can move forward and take better control of your financial health in the future, no matter what it takes for you to get there.

Photo by Sophie Dupau