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A lot of credit card holders get into a bad credit history situation because of unimaginative spending, irresponsible management of finances and above all punching above their financial capacity. Everything that gets you negative marks on your credit history, are in one way or the other related to the above factors. However, it isn’t impossible to come out of a bad credit history situation. In fact, it is quite possible if you are willing to take it step by step and do everything that it takes to get your credit history back on track. For those wondering, why the pain, it is simple enough to say that without a good credit history, you wouldn’t be trusted much from a financial perspective, be it for loans, insurance, or even for jobs.
Start using just one card
Several credit cards, means several different interest rates, different due dates and different amounts of debt. This leads to confusion and sometimes you might end up missing the payment date altogether. Therefore to start with, you need to stick to just one credit card. Close out all those credit cards where you don’t have a long enough credit history. Consolidate your debt and negotiate for a good interest rate that is reasonable and affordable too. When you start using just one credit card, you will be aware of what your existing debt is and what would be the interest you have to pay on that debt. This knowledge will also steer you away from spending irresponsibly.
Never miss a payment date
Whether it is your mortgage payment, your auto insurance premium, your credit card bill or personal loan monthly payment, don’t miss the due date. Automate the payments if required. Every time you miss a bill payment date, you end up spending extra money as late fee. Moreover, you will get negatives on your credit history for inconsistency of your monthly payments. All the card holders with excellent credit rating are those who have been exceptionally consistent in their bill payments for years at a stretch.
Don’t spend if you are not sure about repaying
Most of us can sense when we can repay something and when we cannot. When you have a card debt to repay, don’t pile on more on top it by purchasing what you don’t need. Your first aim is to bring down the debt. Outstanding balance on your credit card means, late fees, excessive interest on the balance and sometimes overdraft fee for crossing the credit limit. All these are unnecessary burdens on your finances and hence should be gotten rid of. The best way to do so is to bring down the debt as much as possible and as early as possible. Moreover, high outstanding debt also means excess use of your available credit, a factor that adversely affects your credit rating eventually. A good way of repaying could be by using a balance transfer card that will free you from the pressure of interests, so that you can focus on the actual debt.