It’s good news - optimism over defeating credit balances is higher than ever, with just 12% of Americans resigned to lifetime debt, down from 21% the year before. Whilst the heap remains high, this is promising news for the millions of people embroiled in credit card and loan delinquencies. But what about life on the other side? Digging your way out of a hard credit pile is a brilliant feat; but the next stage is rebuilding your profile.
The key to being able to get a handle on your lending profile is understanding your credit score. Once you’ve got that nailed down, you can steadily find your way back to looking like a good proposition to lenders.
Rejigging your credit score
As touched on, one of the biggest side effects of a credit hangover is the damaged credit score. With lenders relying on credit scores, poor decision making in younger years can impact on your ability to obtain a mortgage, auto or business loan. With an in depth understanding of your credit score in hand, you can look to start planning how to fix your credit score. Consider using a credit repair agent for this; they’ll be able to employ their expertise to identify and correct damaging errors and credit notes that you would perhaps miss.
Rebuilding your lending status
With your credit payments complete and your monthly income once again fully available to you, there are ways that you can start to safely rebuild your credit score. After dividing your wage packet into the necessary segments and building an emergency fund, it can be beneficial to take out a credit builder card. Now, you may not be given preferential interest rates when seeking a new credit card as someone with a poor credit score. However, interest rates are irrelevant when building credit - use the card for everyday purchases and ensure every cent is paid off before the interest charged date.
Saving your balance
It can be tempting to cut your credit cards up and close the accounts once you’re fully paid of. Before you do, stop and think of the benefit of keeping those balances close. If you’ve brushed up on your financial literacy and aren’t prone to problems involving impulse control, having those balances around and using them intermittently - up to 25% of balance - will reflect positively on your account. Like a credit builder card, consider making large purchases on one card and paying it off within the time before interest is charged.
Poor financial decisions don’t have to be the door closing on a fruitful financial lifespan. For those recovering from debt, take care and plan carefully and you’ll have the best rates soon enough again.