Posted on: April 11, 2019 Posted by: James McQuiston Comments: 1

When your FICO score drops below 620 you are considered to have poor credit, which comes with many complications. You can miss out on some great opportunities unless you do what you can to reestablish or raise your credit score.

Your credit score is a consideration for many things including employment, short-term loans and mortgages. With no credit or poor credit, it may be very difficult to qualify for any type of loan with a traditional lender. You will likely be treated as a high-risk investment.

If you are serious about repairing your low credit score, there are several things that you can do to get started. From the benefits of loans with no credit check to developing better budgeting and spending habits, with discipline you can start repairing your credit in a short period of time.

Make Payment Arrangements

Avoiding a debt or continuing to only make the minimum payment is never going to get you out from under the mountain of what you owe. Be straightforward with your creditors and try to make reasonable arrangements for prompt repayment. Most creditors are more than willing to work out an agreement that is suitable for both parties. If you have several creditors and are becoming overwhelmed with increasing interest charges you can try a consolidation loan. This will allow you to pay off several debts at once and only leave you with one manageable payment.

Develop Better Spending Habits

When things become financially challenging it doesn’t take long for your credit score to be affected. If you want to reduce your debt quickly and raise your FICO score past 620, you will need to dedicate yourself to better spending habits. Start by writing down all of your expenses so you will have a clear view of where your money is going. Look for personal spending cutbacks and stick to your new budget. It may take sacrifices, but it will be worth it in the end. You can also help manage your money by setting up automatic withdrawals for your current payments. With a regular payment schedule in place it will be easier to budget your money.

Pay Down Your Credit Cards

If you want to improve your credit score it is a good idea to start eliminating your credit card debt. Credit cards hold some of the highest interest rates that can add up quickly without making much of a dent on the principal amount that is owed. Don’t cancel your cards, as that can negatively affect your score. Your goal is to reduce your balance as efficiently as possible which means making larger monthly payments and avoiding the minimum deposits.

The average credit card debt can take over 20 years to pay off if you are only making the smallest acceptable payments. Start by making weekly payments that are easier on your budget and will add up to a substantial monthly total to get ahead. You may also want to consider transferring your current card balances over to the card that holds the lowest interest rates.

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