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How To Improve Bad Credit Habits

May 3, 2022 | Emma Frost

improve your credit score 

Bad credit lingers. It means you may have a hard time getting a credit card, and if you do score one, your interest rate will likely be high.

It often means you may have to pay more for car insurance. And you may have to pay extra security deposits or fees for things like a cellphone, renting an apartment, or a car.

But you don’t have to be resigned to having bad credit. Here’s how to improve bad credit habits right away.

Ways To Improve Your Credit Habits

Stay Aware Of Your Credit Score

You figure out exactly how to improve bad credit unless you’re regularly knowledgeable about your credit status. A credit score determines your creditworthiness and considers how you’ve paid bills over time and your lending history.

Your bank likely offers a look at your credit score for free and may even explain what is impacting your number the most. Don’t check it once and forget it; periodically reviewing your score is key to credit improvement.

Pay Down Your Debt

One of the biggest factors at play with your credit score is your debt. When considering how to improve bad credit, look at your debt first. Any payment amount that lowers your credit card balance may improve your score quickly, especially if you hold off on other credit card purchases as you work on your debt.

Commit to Paying Your Bills On Time

The most common type of credit score is the FICO score — it’s used by over 90% of the biggest lenders — and the factor used the most is payment history. Those who pay their debts on time and responsibly over time enjoy a larger credit score.

Those who regularly make late payments or ignore debt like student loans have a lower score. So how can you use your bills to your advantage when figuring out how to improve bad credit? Avoid late payments by always keeping track of your bills each month either digitally or on paper, set alerts for your bill due dates, and consider setting up automatic bill payments through your bank.

Consider Simplifying Bill Payments

One other approach with bills is to charge as many as possible each month on one credit card. That makes paying bills on time easier since you just have to monitor one card and could improve your score if you pay off that card on time every time.

Use Credit Conservatively

The second-most important FICO credit score factor is usually credit utilization or the percent of your credit limit you use at any time. Paying your balances each month in full is the easiest way to maintain lower credit utilization.

If that’s not feasible, most financial advisers recommend keeping your outstanding balance at about 30% or less of your limit.

The 30% approach is just a starting point. Over time, moving your utilization down to 20%, 15% and 10% or lower is a very effective way to see your credit score jump.

Pursue Debt Consolidation

The average American household owes over $155,000 in debt, saddled by everything from lines of credit and student loans to financial emergencies. If you’re deep in debt, one option is taking out a debt consolidation loan from your credit union or bank to pay off a large chunk of your debt faster.

Debt consolidation typically means you just have one payment to remember, and you could even get a lower interest rate on it.

Another option is using a balance transfer credit card, consolidating several balances spread across your credit cards, and paying them all off with one transfer card.

Address Financial Emergencies Fast with a Bad Credit Title Loan

Financial emergencies can strike at any time and can hit even harder if you’re working hard to improve your bad credit.

Most lenders, such as banks and credit unions, require good credit to qualify for loans. A bad credit title loan offers just what its name indicates: a way to pursue financial assistance and not be instantly disqualified despite a bad credit score.

You may qualify for a bad credit title loan of up to $15,000 from Southwest Title Loans in as little as 30 minutes.

girl with cash

Just fill out the short title loan inquiry form on our homepage and one of our loan representatives will give you a quick call to walk you through the rest of the loan process. Once you qualify and are approved, you get the cash you need the same day or the very next business day.

Get Started Today

Figuring out how to improve bad credit will go a long way on your path to financial responsibility. A bad credit tile loan may help. Simply start online, give us a call, or visit one of our locations near you today.

 

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.

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