Rebuilding your credit can be a challenging process, particularly if you have a notably low credit score and you’re only starting to make an effort. Progress can be slow in the beginning and it can feel like you’re never going to reach your goal after a while. Fortunately, with a bit of persistence, anyone can boost their score by as much as a couple of hundred points within a period of just 6 months to a year. With that said, here are four reliable ways you can rebuild your credit regardless of how bad it currently is:
1. Use a Payday Loan
While payday loans may come with hefty interest charges, they can give you the ability to repay some of your debts, which is one of the fastest ways to make a positive impact on your credit. Plus, you can use a service like Cash Ladyto get approved for one of these loans using nothing more than your proof of income and other basic details – no credit check required.
2. Apply for Secured Credit Cards
Secured credit cardslet you gain approval with any credit rating because you’re putting forth your own funds as a deposit that’s used to secure the balance of the account. For example, if you deposit £500, then that would be your available credit line for the card. In this way, you’re basically spending your own money with the promise that you’ll repay any amount that you use. The key to using one of these cards is to make sure you repay your balance in full every month.
3. Use Debt Consolidation
Debt consolidation loans and services can help you bring all of your debts together under one loan, which will make it easier to keep track of repayments while also potentially reducing the total amount of debt owed. Many debt consolidationcompanies will work with you to write off some of your owed amount and set up a flexible payment plan that you can use to repay your debts in a more simplified and streamlined manner.
4. Understand Credit Utilisation
Finally, another step you can take to make sure your credit is being rebuilt at an optimal pace is to understand how to properly utilise your available credit. Using too much of your total credit line can cause a high utilisation rate, which can reflect negatively on your score in the long-term. While the ideal utilisation rate will vary depending on your situation, in general it’s best to never use more than 30%-50% of your balance across all your credit cards and loans.
Rebuilding Credit is All About Patience and Persistence
While the above steps will certainly help you reach your goal of rebuilding your credit, it’s definitely going to take some time and consistency. If you can wait it out and keep practicing good financial management habits, within 1-2 years you should be able to get up above 650-700 or higher depending on how bad your starting point was to begin with.