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Bad credit history brings a lot of problems for customers. Not only does it become more and more difficult to obtain credit of any sort, but loans, insurance and mortgages, would all become more expensive. Instead of paying those high rates blindly, customers can implement some simple strategies to ensure that their credit history and therefore their credit score improve along the way. It doesn't take very long and more importantly a simple improvement from bad credit to fair credit could save a lot of money for customers. As they say, a stitch in time saves nine.
Get an outlook over your debts and consolidate them
Bad credit history to a large extent is because people don’t manage their finances well and get into debt. Often this is triggered by taking various loans and several credit cards most of which are maxed out. Therefore, individuals have to get an understanding of what their financial condition is and get the exact debt which they have. Debt consolidation is an important strategy if one has to recover from bad credit history. Although closing various credit card accounts would be detrimental to the credit history, not using them would be more advisable as inactivity fees cannot be charged on most cards according to the new credit card rules. 0% Balance transfer credit cards would be a good option to get all the debt onto just one credit card. This allows individuals to know how much debt they have and work out a minimum payment solution with the creditor or card issuer.
Reduce credit card expenses to match income
Bad credit history is mostly due to high outstanding balance, missed payments and accumulating interests on the credit card debt. The root cause of all this is the deficit between what a person spends on the credit card, and what a person can afford or spare at the end of the month. Spending on credit cards which already have outstanding balance would only increase your costs as you have to pay high interest on every expense of yours.
Make at least minimum payments on debt
As per new credit card rules the minimum payment on cards should include all fees and charges for that month plus an additional amount to be repaid towards the debt. This means that if individuals consistently make their minimum payments every month, they will get rid of their credit card debt sooner or later. Consistency is the key to recover from bad credit history. It is not a bad idea to pay more than just the minimum payment to get rid of the debt faster.
Inspect your credit reports from time to time
Not only will this give you an idea about your extra expenses but you can also catch fraudulent charges if any and deny making payment for them. Similarly, you should use the new rules to seek your credit file from creditors if they don’t give you the best terms. This will allow you to find out what stands against you in the credit history and work towards rectifying it.