Posted by on May 24, 2016 in Finance & Insurance | 0 questions

There are times when it is necessary to get a loan during an emergency. In such instances, the wise thing to do is to pay back the loan as soon as possible. However, some people make it a habit for not paying loans, or buying on credit and not paying the installments on time.

This should not be a recurring theme. There are ways to change this before it becomes a bad habit. The following are some steps to get yourself out of a bad credit rating.

Get your credit score.

This is the first step to getting your credit standing straightened out. You can get this for free from credit rating agencies. Understand what it means, and where your bad rating comes from. This could include the number of instances your credit score was pulled out for evaluation, as well as loan applications which were turned down. Bed credit loans also have an effect on the score.

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Restructure any credit card debts.

Credit card companies would rather restructure your outstanding balance, if only to ensure that they will get paid in the long run. After restructuring and paying off the credit card debts, they would be happy to accept your application for a new credit card.

Pay cash.

Make it a habit to pay in cash. Better yet, cut your credit cards so you won’t be tempted to use them. This may sound extreme nowadays, when almost everything is bought via credit cards. However, this will also instill in you the concept that you need to earn it first before owning it.

Schedule your grocery purchases.

This might entail the use of your credit card. However, it will also put a cap on the number of times you went to the supermarket, and also lessen your total purchases.

No unnecessary purchases.

This might be hard to discern, but if you can single out items which you don’t need, then you won’t be buying them. Needing and wanting are two different things. Most people cannot differentiate between them.

Proactively save.

There are a lot of ways you can save. This could be in the form of the utility bills, entertainment, trips and others. Try to find ways that you can cut on expenses. The savings you realize can go a long way to paying off your unpaid bills or your bad credit loans.

Pay your Bad Credit Loans.

The sooner that you pay off these loans, the sooner that your credit score gets better. Besides, bad credit loans have big interest payments attached to them and when you don’t pay, the interest rates increase.

The above list of steps may sound extreme, but it is better to tighten your belt and tough it up, rather than spend the rest of your life trying to catch up on your debt.