HOW TO IMPROVE YOUR CREDIT SCORE ON A LIMITED INCOME
If you’re having a hard time making ends meet, it’s likely your budget and bank account are getting depleted.
But there might be something else that may be taking a big hit - your credit. If this sounds like you, then you might be wondering how to improve your credit score on a limited income. Lets drive right through it
When you are on a limited income, it’s easy to use your credit card when you’re feeling the pinch of your monthly budget. On the flip side, you could be swiping your way to bad credit.
This component of your finances might not occur to you if you're trying to make ends meet, but bad credit could affect your ability to improve your financial situation.
A low credit score can force you to pay higher interest rates — making it more expensive for you to borrow. Or it might prevent you from getting credit at all. And some employers check credit reports, which could affect your ability to have a job
You may be jeopardizing your future and making it harder to get any more credit, like a debt consolidation loan or a line of credit with good interest rate
There are ways to improve your credit score and get back on track, even if you only have pennies left at the end of the month.
1. KNOW AND UNDERSTAND WHAT MAKES A GOOD CREDIT SCORE
By gaining a better understanding of what makes a good credit score, you’ll be on your way to improving it.
Here’s what goes into a good credit score:
Payment history — 35% of your score is based on this one factor!
Amount of credit owing
Types of credit you have
Recent credit inquiries
2. FIND CREATIVE WAYS TO COME UP WITH CASH FOR DEBT PAYMENTS.
The best way to improve your credit score is to make payments to your debt. Another easy way is to bring in some extra income using skills you already have, or by selling things you might not need in your home.
Here are a few creative ideas to come up with extra cash:
Get a one or two part-time jobs if you can manage it.
Sell clothes, furniture and other items in your home you don’t need
Rent out part of your home or get a roommate
Take online surveys for cash or gift cards and more
3. STAY IN TOUCH WITH YOUR CREDITORS.
This could just save you and your credit. Take the fear out of calling lenders by being open and honest about your situation.
If you’ve fallen behind on your payments, reaching out to creditors will help you find out what options are available to you.
Be sure to let creditors know as soon as you have trouble making payments, that way, you’ll avoid your account going to collections.
4. AVOID DEBT REPAIR OPTIONS THAT PROMISE QUICK RESULTS
No matter how hopeless things may seem, don’t get duped into quick fixes or magical debt loans.
Your credit cannot be repaired overnight, so run from anyone that promises anything close to that.
Payday loans are another quick fix to avoid. Not only are they a costly way to borrow money but using debt to pay for debt is never a good strategy.
If you cannot afford to pay the debt you already have, how can you pay another debt added to your list?
Debt settlement companies might offer to help you settle your debt for less than you owe.
However, these programs often ask you to stop making payments to creditors and deposit money into an escrow account each month until there's enough to pay the settlement amount. This will more likely hurt than help your credit, because your bills aren't being paid and late fees are accruing.
GET A SECURED CREDIT CARD TO BUILD CREDIT
You have to have credit to build credit — which can be hard if your income is low or you're unemployed and lenders aren't willing to take a chance on you. If you're in this situation, you should get a secured card to build your credit.
Banks and credit unions offer secured credit cards, which act like traditional credit cards but require a deposit that acts as your line of credit
If you have a limited income, then a secured card is a very good option.
If you can save for a deposit for a few months and then open the card, in as little as nine months, you can establish a credit score or add enough positive information to increase your score
TIP OF THE DAY
Borrowing and repaying your credit card
bill on time, in addition to not carrying a
large balance is one of the most important
things you can do to build up a great credit score.
However having at least one account with
a high balance can hurt your score even
if your overall utilization is low.
Make sure your score wont suffer by
spreading out a low utilization across
all your accounts.
We hope we answered your question onhow to improve your credit score with a limited income If you’re still looking for some help improving that credit score, be sure to contact us and our team will help you any way we can
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