The bills slowly start piling up and before you know it, you are drowning in debt. You now have a bad credit score and you are struggling to borrow money because of it. It can be scary and confusing, but the only way to stop your credit score from getting worse is to understand how you got a bad score in the first place. Here are some things to consider when trying to understand your bad credit score and tips on how to improve it.
Do you pay your bills on time?
Look back on some of your bill payments. If they were late and past the due date, this will contribute to your bad credit score. Late payments show lenders that you are struggling to pay back your debt and therefore, you are a risky individual to lend to. Even one day late can translate into 30 days past due on your credit history.
To start fixing this problem, put reminders in your calendar to pay your bills on specific days every month. By having these constant reminders, you can begin to pay your bills on time and show lenders that you are responsible and able to manage your debt.
Do you pay your debt in full?
You may have a bad credit score because you do not pay your debt, such as credit cards, in full every month. If you are constantly requesting extensions and paying interest on your debt, then your score will worsen over time. This will show lenders that you are unable to manage your debt and may struggle to take on anymore.
To help prevent this from occurring, make sure to track how much you spend versus how much you have. Do not spend more money than you actually have because this will lead you to extending your pay back periods.
It may just be a mistake!
It is possible that there are errors on your credit history that have led to your bad credit score. If this is the case, then you should act immediately to reverse the errors. You can do so by contacting your creditor or a credit bureau. You do not want these mistakes to remain on your credit report because it will impact any future borrowing.
Having a bad credit score is scary, but there are ways to manage your debt and recover your score. It takes understanding what you have been doing in the past to make the right choices in the future. The credit counsellors at Credit Counselling Services of Atlantic Canada can help guide you in improving your credit score. Contact us today for more information about improving your credit score and managing your debt. We can help.