Personal Finance 101: How to Rebuild Bad Credit - Insane Visions

Personal Finance 101: How to Rebuild Bad Credit

For some people, checking their credit score is a constant source of agitation. That’s because it doesn’t take much to wreck your credit –– a couple of unwise financial decisions early on can put you behind a pretty massive eight-ball. As such, many people feel they’re stuck with bad credit and worry that it’s impossible to climb out of the hole they’ve dug themselves. The good news is, that doesn’t have to be the case. Just make sure to follow these five steps –– and you’ll be well on your way to reestablishing a respectable credit score:

Take Stock of the Situation

When was the last time you checked your credit score? If you can’t think of when off the top of your head –– or if it’s been more than a few months –– it’s probably time to reevaluate your standing. Though you may be reticent to look, knowing your credit score is vital if you’re ever going to work to improve it. Plus, checking your credit score regularly is a great financial habit to cultivate.

Cut Out and Consolidate

Plain and simple, the more credit cards you own, the more difficult your finances become to manage. If you’re struggling to develop a healthy line of credit, cut down on unnecessary credit cards. Leave yourself with fewer options, and rather than trying to juggle a myriad of different accounts, focus instead on managing a few important ones. Furthermore, leave your credit card in your wallet for a while. It’s more damaging to make a frivolous purchase than it is to simply walk away.

Set Up a Payment Schedule

We get it –– life can be awfully hectic sometimes. However, failing to pay your bills on time will have a severe negative impact on your credit score. So always make sure you’ve got an automatic payment option set up with your bank as a failsafe.

Separate Personal and Professional Finances

Though you may be tempted to supplement your business with your own personal capital, know that this could carry big repercussions on your personal credit if things go awry. Even if you feel secure in your planning, don’t gamble with your own money; instead you should probably look for some type of business loan that works for you.

Handling Big Purchases

Though it’s not ideal, people with bad credit have to make substantial purchases like everyone else. If you find yourself in the market for a new house, car, etc. consider all your options first before making any binding agreements. What’s more, it’s also a wise play to seek out funding options specific to your situation; think doctor home loans, or auto insurance loans for veterans. The more creative you can be in your financial planning, the higher your chances are for success. And remember, building good credit may be difficult, but you can do it with responsible actions and a little forethought.

Beatrice Santos
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