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How To Recover From A Bad Credit Profile

If you’re unsure about what a bad credit profile actually is, don’t worry – you’re not alone. Many people become confused about credit profiles – what they are and how they work.

Generally, your credit profile is information held in a credit report about you. A credit profile is something that lenders will look at when you apply to borrow money. In particular, they’ll look at:

  • Whether they will choose to lend you money
  • How much interest they’ll charge you
  • How much money they will allow you to borrow

If you have a poor credit profile, it can make things harder when it comes to borrowing money as lenders think they’ll be taking on a higher risk in lending you money. However don’t panic! There are a number of things you can do in order to improve your credit profile.

Firstly, it’s important to realise that this often doesn’t happen overnight. You’ll need to see rebuilding your credit profile as something that you need to work on long term and really stick to.

Here are some top tips to recover from a bad credit profile

  • Figure out exactly what you spend each month.
    Make a list, draw up a spreadsheet, whatever works for you. Work out how much money you earn (income) and how much money you spend (outgoings). Have a look at where you can cut back and see where the majority of your money is going.
  • Make sure you set aside enough money every month to always pay your essential bills – such as rent, utilities and any other repayments.

  • Pay Your Bills On Time
  • So many people have gained bad credit profiles simply through not paying bills on time. Get organised and ensure that all of your bills are paid when they’re due – this will stop you from being penalised with extra fees which will affect your credit profile.

    Set alerts in your calendar or write huge reminders to yourself in your diary – all bills must be paid in a timely manner if you want to recover from a bad credit profile.

  • Stay Put
  • Lenders look for people who are reliable in their repayments and who have a solid, stable background. Wherever possible, avoid moving house continuously so that you can show evidence of living at a residence for more than a couple of months at a time.

    Similarly, if you can show evidence that you have worked at the same job and obtained pay slips over a substantial number of months or even years, your credit profile is likely to benefit.

  • Know Your Score
  • You’ll benefit from knowing everything possible about your credit profile. You can easily obtain this and it is your right to do so. You also need to be honest with your lender and let them know exactly what has happened with your credit history – there is no point in trying to hide anything from them and you could get yourself into further trouble if you do.

    If you have any bankruptcies or larger incidents on your file, such as court judgements against you, make sure you know exactly how long they will be on your file for and consider waiting until they have come off before applying for a new loan.

  • Avoid Payday Loans
  • It can be tempting to go for a quick and ‘easy’ loan at the end of the month when you’re a little short on cash. However these often come with huge rates of interests and will simply land you in more trouble. Try to avoid them at all costs and instead budget accordingly throughout the month.

  • Minimise Your Credit Applications
  • Lenders will often look at the number of times you have applied for credit. Inconsistencies or high levels of applications will ring alarms bells to them and may prevent them from lending you money.

    Always try and be mindful when making credit applications and only do so in specific cases when absolutely necessary.

    Article provided by Loans for People With Bad Credit