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What is Credit Control and Why is it Important?

Having a bad credit score can be exceptionally frustrating. You may feel irritated that a mistake you made in the past is having a negative impact on your future. In fact, there are many reasons why people end up with a negative credit rating. Of course, there are those who have gotten themselves into debt and failed to make payments on previous credit they were given. Nevertheless, there are also those that have harmed their credit score without even realizing it through a lack of education, as well as individuals who don’t have a credit history because they have never had a credit card or borrowed money. No matter what applies to you, there are some steps you can take to repair the damage.

Understand credit and your credit score

As mentioned, one of the main reasons why people have a bad credit score is a lack of education. Read this post on ‘all you need to know about credit’ before you dive right into the other tips below. It is imperative that you know what credit is, what a credit score is, how credit scores are determined, whether they change, and how your score is used. By educating yourself, you will be best placed for managing your credit score effectively.

Pay off your debt

If you have any outstanding debts, now would be a good time to pay them off. Lenders are often hesitant about giving money to individuals that already have a lot of existing debt. Put a plan in place for paying off your debts. Most people start with the biggest and work their way down. Others prefer to pay off a bit of each debt every month.

Borrow money

This may sound odd! Surely borrowing money was what got you into this mess? Plus, how are you supposed to borrow money if you have a bad Credit Control? Well, nowadays there are credit cards, loans, and other financial lending products for those with bad credit. By taking out one of these products and paying your repayments on time, you can show that you are less of a risk to lenders, and this will benefit your credit rating. It is a good idea to start off with a small commitment. By doing this, you don’t put too much pressure or temptation on your shoulders, as monthly payments will be small and you won’t be tempted to splurge on other items, which could be the case with a credit card.

Check to see if you are linked to another person

It is wise to find out whether you are financially linked to another person, for example, your partner, a friend, or a family member. If you are, and they have a bad credit rating, this could have a negative impact on your credit score. If you have any joint accounts with people, it is a good idea to close them, so you have sole responsibility for your own credit rating.

Some of the mistakes you must avoid

Some of the mistakes you must avoid

A bad credit score is a problem that a lot of people face. From naïve mistakes made when younger to financial troubles caused through redundancy, there are many different reasons why people fall into the trap of a poor credit rating. However, the good news is that this score does not need to stick with you forever. There are ways to rectify it. Nonetheless, the last thing you want to do is cause even more damage, so let’s take a look at the credit repair mistakes you need to avoid.

  • Filing for bankruptcy – A lot of people file for bankruptcy because they see it as a quick fix. This is not something you should use as a credit repair tactic. While it can be beneficial in some cases, it can also make your credit score a lot worse. Plus, bankruptcy will remain on your credit check for around ten years, which will make it extremely difficult for you to get a loan or a credit card over the next decade. Even worse bankruptcy comes off your credit report; it can still haunt you, as a lot of lenders will ask whether you have ever filed for bankruptcy.
  • Not repairing your credit at all – One of the biggest errors you can make is simply forgetting about your credit score and putting it to the back of your mind. It will come back to haunt you when you want to buy a house or start your own business.
  • Not borrowing money – Many people feel the only way to fix their credit rating is by stopping borrowing money altogether. While this will stop your credit rating from getting worse, it won’t necessarily make it get any better. Borrowing money the right way can boost your rating, however. By taking out a loan and paying it back on time, you show that you are a credible person to lend to, and this can improve your score. Taking out a bad credit rating mobile phone contract is a good place to start. This is likely an item that you need, and the monthly repayments won’t be too substantial, so it’s a great way of showing you can make repayments.
  • Cutting up your credit cards – There seems to be this common misconception that cutting up your credit cards is a great way to improve your credit score. In fact, cutting up your credit cards won’t make a difference. You will need to call up the credit card company and cancel your account if you want to clean up your credit rating. Don’t be so hasty to cut them all up, as using a credit card correctly is a good way to repair the damage on your rating.
  • Playing the balance transfer game – Last but not least, you are only postponing the inevitable if you transfer credit card balances to avoid making a payment. This tactic is only going to get you so far, as interest fees will be added every month. This means that the amount of money you owe is going to get bigger and bigger each month, which will make your credit issue so much more difficult to rectify.

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