Money Management to Clean Bad Credit History

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most 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

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.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.

Related Research:

Top 5 Cards for Travel from Our Partners: Spring 2018 – Expert Choice

Top 5 Cards for Travel from Our Partners: Spring 2018 – Expert Choice

Posted: February 12, 2018

Days are getting longer, snow is melting and you already feel the lightest breath of warm breeze on your face - spring is here. Summer holidays are looming, and so is Easter with its shopping. You can lift in spirits and let CreditLand ... Continue reading
Cash Back or Travel Rewards? Here’s How to Decide On The Right Card

Cash Back or Travel Rewards? Here’s How to Decide On The Right Card

Posted: February 10, 2018

If you're trying to find the perfect rewards credit card, you might feel like you're drowning in options. There are just so many out there, and many of them look similar. This can make it tough to decide on a card. One thing people often ... Continue reading
Price Protection: Credit Cards That Will Refund a Price Drop

Price Protection: Credit Cards That Will Refund a Price Drop

Posted: February 8, 2018

Those who often find themselves buying stuff and then discovering that they could pay less for the same item they've just bought, will appreciate this credit card benefit – price protection. This is the least known and the most neglected ... Continue reading
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!