Money Management to Clean Bad Credit History

Advertising Disclosure

Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » Research » Guides » Building Credit History » Money Management to Clean Bad Credit History

Money Management to Clean Bad Credit History


Updated: December 26, 2012

Add to Favorites:
Bad credit history is often due to bad credit card management and overuse of the credit. A bad lifestyle where expenditure is not planned is often the cause of bad credit history. A bad credit history has many disadvantages. You will not be offered many rewards on credit cards even though your income justifies it. You will get a higher interest rate on your credit cards, home loan mortgages and also auto loans. The premiums you have to pay for auto insurance are relatively higher than others with better credit history. You may also be asked to pay up front deposit for utilities such as telephone connections, internet connections, electricity etc. Most of these side effects mean that you have to face a lot of inconvenience and more importantly miss out on a lot of savings. This is why cleaning your bad credit history is so very important. The first thing you have to do is start paying out your outstanding dues on time. If you have a high outstanding balance and a bad credit history, working out a negotiation with the credit card company a proper deal is not a bad idea especially if the high interest rate makes it impossible for you to clean out the original. You can also consider a balance transfer, only in a scenario when the debt is excessive and there is no scope of clearing it all out anytime soon. However, you should keep your credit card account open as you don't want to erase out the history and start from scratch all over again. Credit scores go lower and lower as your credit card is maxed out or expenditure gets closer to the credit limit. One thing you can do is to keep your extravagant expenditure down. This will have two benefits. Firstly, your monthly payments will be less allowing you to pay a little bit extra on the card to improve your credit score. Secondly, your expenditure will be way less than the credit limit thus improving your credit rating. Another way of solving the problem is by requesting an upgrade and asking for a higher credit limit. That is however, a risky proposition unless you have good money management skills as it can push up your expenditure every month increasing the chances of getting an outstanding balance. Besides, paying your monthly payments on time and keeping your expenditure low, you can also go for an auto loan if you have a bad credit history. This will allow you another opportunity of showing your consistency with monthly payments; although, it is advisable not to take it up if you cannot really afford it. Ensure that you have as less cards as possible. It is often not a good idea leaving a couple of your cards maxed out. Similarly you should try to close out all loans if possible or work out with a consultancy or credit card company towards consolidating your debt into one card if you have a bad credit history. This makes it easier for you to manage and know exactly how your payment plan is going and what is due at the end of every month.

Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.

Related Research:

How to Subdue Wedding Expenses and Earn up to $1,000 for Honeymoon

How to Subdue Wedding Expenses and Earn up to $1,000 for Honeymoon

Posted: June 21, 2017

Whether you are married or not, we all agree that marriage is incredibly important for a person. It signifies the beginning of two people as a team, as a family, of a long commitment. It is a newly born union and the sign of your choice, ... Continue reading
How To Choose The Best Credit Card For Everyday Spending

How To Choose The Best Credit Card For Everyday Spending

Posted: June 21, 2017

When you reach for your wallet to pay for groceries, gas, dinner out, or any other everyday purchase, are you searching for cash, a debit card, or a credit card? Many people hesitate to charge this type of everyday spending to a credit ... Continue reading
How to Save Money. Best Credit Card Deals and Tips.

How to Save Money. Best Credit Card Deals and Tips.

Posted: June 20, 2017

We all've been through or may find ourselves in such an emergency when money is needed immediately. Lucky you are if you have savings for unexpected expenses. If not, it's never too late to start saving money. There are different ways to ... Continue reading