Ways To Improve Your Credit

Ways To Fix Bad Credit

Credit scores impact every aspect of our lives. It plays as an important factor in making a financial plan such as at what rate you would get for car loans, mortgages and credit cards. Having a good credit score will open a lot of doors for you when making financial decisions. However, life sometimes gives us a blow in the gut and kicks us while we are still at the bottom. Incidents like divorce, bankruptcy and missed payments could cause grief on your financial report and some of the causes could stay on your record for up to 7 years. None of us has a time machine to reverse what has been done. But, with the right techniques and patience, we can all fix these issues over time. Read on if you want to know what hurts your credit score and what you can do to improve your credit.

Reasons For Bad Credit

Fixing a bruised credit is not an easy task and it often requires great patience and consistent efforts. It is a rewarding task if you are willing to go the extra mile. People damage their credits for different reasons from unhealthy spending habits to declaring bankruptcy. Before we try to solve the issues, let’s first take a look at what causes them.

Unhealthy Spending Habits

First and foremost, those struggling with financial hardship usually have a history of irresponsible spending. People who enjoy indulging themselves tend to spend more than their monthly budget and then find themselves in great debt with a room of useless products. Using a credit card will help you build a trackable credit history that helps lenders make their lending decisions. However, using credit cards can only add benefits to those who are credit-worthy. On the contrary, those who can’t make regular payments will be greatly penalized. Keep in mind there is no one-size-fits-all solution when it comes to fixing bad credit. Let’s take a look at different scenarios and how we could address these situations individually.

  • Late Payments
  • Short Payments
  • No Payments

Needless to say, all of them will leave unpleasant marks on your credit rating. For those who are currently struggling to make full payments on time, your credit report will start to pick up when regular payments are made.

The worst thing you can do is simply ignore the requested payments and continue maxing out your balance. This irresponsible action will bleed your financial report and ultimately lead to a “credit card charge off”.

Credit card charge off A charge–off means a lender or creditor has closed your account and looked forward to transferring your account to a collection agency and taking possible legal actions.

“Credit card charge off” goes off after six months of non-payment and your lender will mark your account as “delinquent”. The record of delinquency will live on your credit report for up to 7 years. Avoid this at all costs!!


1. Be responsible with your spending

Those with delicate financial standings need to pay close attention to where their money goes. You should only purchase on credit with the absolute certainty that you will pay it back on time.

  • Set yourself a budget at the beginning of each month
  • Download a budgeting app like the balance to keep your budget in check
  • Make a realistic saving plan and stick with it

2. Always pay your bill on time.

This is a proven method to fix bad credit. Lenders love to be paid back on time and they will reward you with an improved credit rating. If you can’t afford the full balance at once, you should , at least, make the monthly minimum payments.  It shows your commitment to contributions and willingness to work with your lender. However, you don’t want to keep making minimum payments for long because this strategy won’t help you lower your credit ratio and improve your portfolio when applying for a larger loan.

3. Keeping your credit utilization ratio as low as possible

The rule of thumb is that the lower your credit utilization ratio is, the better it is for your credit rating. Many credit experts think keeping your credit balance under 30% is ideal for most consumers and it looks healthy in the eyes of banks. It is about time to change your spending habit if you consistently rack up your credit bill above the recommended threshold.

Declaring Bankruptcy

Declaring bankruptcy should always be saved as the last resort for someone who struggled with acute debt problems. Bankruptcy will not only severely damage your credit but lives on your credit report for up to 7 years for the first time and 14 years for the second time.


You should always get professional advice from credit consultants before even considering declaring bankruptcy.

Defaulting on Loans

Defaulting on your loans can have a detrimental effect on your credit and the damage will stay on record for up to 7 years. In addition to damaged credit ratings, those with car loans and housing mortgages might even have their properties foreclosed by lenders because these properties are  “securities” to the loans. The worst-case scenario will be you winded up with a bruised credit and foreclosed property.


Fortunately, the foreclosure process usually takes up to a year to be effective. You will still be able to make remedies during the remdemption period. Keep in mind that your lender has zero interest in your property. The only reason why they want to foreclose on you is that you have missed way too many payments and they need to sell your property to make up for their losses asap. Your lender won’t initiate the foreclosure process unless they do not have any other options. Having said that, here is what you need to do when you failed to make mortgage payments:

1. Contact your lender immediately to explain why you have already missed your payments.

Lenders are usually open to working with you to ensure you will make your next payment on time.

2. Contact your lender immediately to explain why you have already missed your payments.

Never give up, there is always hope.

Fixing bad credit is never meant to be an easy journey. The roads are bumpy and rough and it requires arduous work to reach the end of the tunnel. There isn’t a solution that works for everyone. Depending on your own financial situation, you will need to make a plan that speaks for you. To sum up, you should always remember:

  • Make a Plan. Stick with it
  • Pay your debt first. Have fun later.
  • Always seek advice from your credit consultant before declaring bankruptcy.

I understand these principles might not sound motivational nor exciting to you. But they are the most fundamental rules you should live and breathe if you want to have a strong financial future to look forward to.