Making a big purchase will often require you to take out a loan. A new car, a home, or a renovation project are perfect examples of this. Still, this won’t be easy for everyone. Depending on your credit score, you may even be rejected by the bank. I’ve definitely had this happen to me on a couple of occasions. At one point, my score was well below 450. On a scale from 300 to 800, that is bad. Not catastrophic but definitely bad. If you’re in a similar situation, you must be wondering – how do you get out of this pickle?
Assess your finances to understand how bad they actually are
What’s a low credit score anyway? It really depends on what you’re aiming for. In order to rent an apartment, you’ll need it to be above 620. You won’t get a credit card issued without at least 700. For a car loan, a number closer to 750 is ideal. For a home, it will need to be at the very top of the scale. If these numbers sound high to you – you have a problem. I had one too. My bad credit score was an issue for years. The first step I had to take was to objectively assess my situation. I had to understand my income, how much I spent on bare necessities, and what were the things that I was essentially wasting money on. You won’t get far unless you do this.Also read: Facebook's Libra Faces new Difficulties from G7 Nations
Take it one step at the time to avoid failure
A low credit score usually stems from debt. Loans, credit cards, and unplanned expenses can easily put you in the red. This, in turn, is not something you can just get rid of in a single day. Once you are able to systematize your finances and really rein in your expenses, you can start saving and paying off your loans. Every little bit counts. Let’s say your aim is to reach the minimum credit score for renting a house. Know that this will take time. Always look to manage your money efficiently and use all the help you can get from online resources. After a while, your credit score for renting should start looking much better. Be patient.Also read: IoT - Revolution or Evolution in the Banking or Financial Services Industry
Look for advice if you feel lost
If you’re wondering how to clean up your credit report yourself – you are not alone. Plenty of people are looking to do this without the help of expensive financial advisors that would only add to the burden. Believe it or not, your smartphone will come in handy on this mission. Some apps designed for managing money and discussing strategies could make a big difference. This is a particularly useful list and I can say that each of these apps has helped me in one way or another in cleaning up my act.
Of course, you will still have to work hard and stay focused. There is no miracle way to improve credit score immediately. It takes time and dedication but, with a little boost from technology, you’ll get there soon enough.Also read: 6 Things You should do right Now to Solidify Your Monetary Situation
A bad credit score can set you back quite a bit. Your previous debt can even prevent you from buying a new car, let alone your dream home. If you want to get anything done in life, you’ll need to push that number above 700. The first step is to objectively assess your financial situation and see where all the money is going. Take one step at the time, rein in your expenses, and ask for advice. Don’t be afraid to rely on smartphone apps for help. A few trusted pieces of software could make a difference in how fast you achieve your goals.