The world has changed. And so has the way of using your credit card. Whatever you do, your credit card score is the thing that is first checked. Your borrowing history is analyzed and what not. A bad credit score is a provider of much stress, tension and despair, especially for shoppers.
But like all things good and bad, the reign of a bad credit will end. And there are ways you can axe it and start depending on your credit card again.
• Without knowing what aspects of your credit card you need to fix, you cannot improve your credit card score. A credit card report lists all accounts that are damaging your credit score. Credit bureaus can provide you with your credit reports. They tell you about the accounts that you need to make amendments in.
• There is chance of an error occurring in your credit card report. If this is the case then you can write to the concerned creditor or a credit bureau about your reported error. Errors are fatal and can damage your credit score to a huge extent. If your report of a late payment has an error in it, your credit card score can stoop as low as 50%.
• You need to balance your credit utilization. It is a ratio between the credit limit and credit balances of your credit card. If you keep purchasing, your utilization will increase. The more your balance increases, the more your credit score is damaged. The trick to do this is by purchasing new things by paying cash instead of using your credit card.
If you have the luxury of avoiding any new purchase, then you can use that saved money for the reduction of your card’s balance. If your balance is reduced, your credit score improves. Hence it is better to avoid new purchases on your credit card or buy expensive stuff.
• Clearing your balance is of much importance as your credit score’s 35% is made up of the payment history. The more your payments are in due, the more damage your credit score. Delaying payments will lead to the tipping point when your case will be sent to the collection agency or the court. So if money is in your hand, clear the balance.
You can talk your way out for more time to your concerned credit card issuer. The credit card issuer may listen to you and re-age the account so that the credit report lists your account as a paid on time one.
• If your credit card still needs to be balanced, then you must not apply for a new credit card. Inquiring about your credit can damage your credit score and if you open a new account, you will lower your credit’s average age which also damages your credit score.
• If you have a bad credit card balance you might want to close your credit card but if you close your credit card which has a balance that needs to be cleared then your credit score will be affected.
It’s a once in a blue moon situation that closing your credit card will save your credit score, it will damage it more. Hence leaving your credit card account open and clearing the dues is the right option.
• It might sound ridiculous to you but approaching your creditors can help you. Credit card issuers are not all strict in their policies, they have tolerance policies. There are probably many like you who are having troubles with their credit cards.
For this credit card issuers have special programs for reducing monthly payment till the time you are able to pay them in the actual way. A good talk and explanation of your troubles can aid you after all creditors are humans.
• Clearing debts is your way to credit score salvation. Debts mount have a 30% share in your credit score tallying. If you want your credit card situation to improve you need to pay off your debt.
If your situation is worse, you will have to take the last remaining option at your hand – to sell your possessions in order to generate money for clearing off your debts. Yes, possessions are dear to everyone and it is not easy to part with them but it is necessary for liberating you from the financial burden and it is worth the pain.
A healthy credit score and no debts on your head are the things you need for you to have a trouble free future.
Once you have implemented on the above, you must make a resolution of using your credit card wisely. The less dependent you are on your credit card, the better it is for you financially. Thinking before spending avoids the possibilities of an unwanted trouble. Credit card is for your assistance but you need to have a resistance against the temptation of free will purchase.