Bad Credit Tips

As of November 2009, the average credit score for Americans was 692. On a scale from 330 to 830, this is far from what you might think of as bad credit. In fact, the average American might enjoy favorable personal loan rates because of this score. If your credit rating isn’t quite so stellar, there are ways to pull it up if you’re willing to change your habits.

Not only must you change the way you use credit, you should change the way you think about credit. Before you do anything else, realize that the time for beating yourself up because of your bad credit score is over. It doesn’t matter whether you lost a job, accumulated medical bills due to illness or simply overspent on your credit cards. It happens to more people than you realize. Follow these seven simple steps to kiss bad credit goodbye.

1. Accept your score for what it is and move on. You can fixate on what you did wrong or you can focus on what you will do right. Choose the latter.
2. Change your spending habits. Pulling out the credit cards to pay for a night at the movies is the kind of behavior that leads to bad credit in the first place. If you can’t pay cash for small dollar transactions, avoid them because they all add up.
3. Build your savings. Murphy’s Law states that basically, if it can go wrong, it will. Start adding to your savings account now so that you don’t have to use your credit card the next time Murphy strikes.
4. Pay your bills on time, every time. If creditors report that you miss payments or always pay late, your bad credit will get worse. Tell yourself payments are due a full week before the official due date and pay accordingly.
5. Pull your credit report. If you suspect you have bad credit because you were denied a loan, you’re entitled to a free report from the credit bureau that supplied the information. Find out what’s in your report and work to remove incorrect information
6. Contact your creditors. Make a list of any company you owe money to and move those using collection agencies to the top of the list. Find out if you can negotiate directly with the original creditor and work out a payment plan. Once you do, stick to it.
7. Pay down your credit cards. Although paying off one card at a time gives you a sense of satisfaction, getting all your cards under 50 percent of the available credit limit is better. Maxed out credit cards are sure signs of bad credit or bad credit waiting to happen.

While none of these tips alone will elevate your credit score overnight, you will be taking steps in the right direction to correct your bad credit. After these behaviors become habit and your credit score inches up, the low interest personal loans you desire are soon to follow.

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