We all make mistakes, none of us are perfect and under the right (or wrong!) circumstances we can all do silly things that we regret later on. For some of us, this can be bad decisions when it comes to finances- the trouble with this is that it then follows us around for six years. Maybe you were young and irresponsible with money, not realizing what impact lending too much and becoming over committed would have on you. Perhaps you just found yourself in a bad situation, where you had no choice but to lend money. Either way, years down the line our lives can be significantly different but whenever we come to lend money we’re tarred by what happened in the past.
Lending money is sometimes necessary and can really improve your life for the better. Financing a car for example could allow you to get out onto the roads, improving your job prospects where you’re able to travel. Taking out a loan to spend on higher education could open you up to better, higher paid jobs when you graduate. Buying a house means that you’re not wasting money on rent each month. Of course, there are bad credit home loans out there that are brilliant if you’ve had adverse credit, but of course a clean credit file will give you far more options. Regardless, your credit file is incredibly important and could be the thing that allows you to advance in life or what holds you back. For this reason, you will want to do what you can to improve it as much as possible. Here’s how you can go about it.
Don’t Move Around
Having lots of previous addresses can be a red flag to some lenders, who will see this history on your credit report. It generally shows that you’re not very settled, and perhaps could move away leaving your debts behind and them unable to find you. Living in one place for a significant amount of time is far better, you should always ensure you’re on the electoral roll too.
Take Out More Credit
This can seem counterproductive, but actually- having access to credit and managing it well is one of the best ways to improve your score. Taking out a card for people with bad credit can be helpful to build your score back up again as you can pay it back each month. However, if you know you can’t be trusted and are likely to overspend again then don’t risk it. You don’t want to be adding further bad things to your score while the others are ready to drop off. You need to be very disciplined to do this, you would spend a little each month and then pay it in full when the bill comes in. That way, you’re not accruing any interest, but the company will report a positive action to your credit report each month.
Finally, one of the best ways to improve your credit file is just to give it time. Luckily, most debts and adverse credit will drop off your file after six years, and older debts aren’t considered as bad as newer ones so some lenders will still consider you with old negative marks on your report. In the meantime, it’s important to not make the situation worse.