Having a bad credit history can be a huge burden for anyone wishing to lead a normal lifestyle. Improving the said credit record is not only about keeping expenses low or paying all your bills on time every time. There is much more to it than that. In order to rectify a bad credit history to make it fair or even good, you need to dig into the history and find out why it went bad. After you find out what went wrong, you can set about rectifying the problem.
Firstly, you need to check your credit limit to find if it was reported correctly. Credit reports are generally an indicator of your financial credibility. They will tell you if something is wrong with your financial history. It is important to get regular reports from the credit reporting bureaus in order to find out your score, and if there is anything wrong. For example, the credit limit that is reported by the lender may be a lot lesser than what it actually is. There might also be erroneous negatives like late payments, missed payments, defaults or bankruptcy on your report. This can be accidental or true. In any case, you need to take steps to resolve the situation.
Secondly you need to find out how much credit you have applied for. If you keep applying for credit cards impulsively and are chasing credit card rewards, then you will find that it is affects your credit history. The more credit you seek, the more it will affect you. The more people ask for your report, the credit score will get lower. It is best to use an old credit card without chasing new rewards and introductory benefits that make no sense. Keep your credit lines low, but at the same time ensure that you do not stop using credit altogether.
Thirdly, are you using balance transfers? Balance transfers can affect your credit score adversely. In the long run, it is a good step if you have planned your moves, but its immediate affect will be to reduce your credit score. Even debt consolidation loans can affect you negatively. This is because your credit limit will be reduced and this will lower your credit rating. Having a smaller balance on many credit cards is much better than having one high balance on a single credit card.
These are questions that you must ask yourself before you go about trying to improve your credit history. There are many negatives that can be removed if you talk to your lender and try to sort it out.