1. Create a debt payment strategy
First things first - repaying your current debt. If you have multiple loans or credit card bills, it's important to figure out the best order for you to pay them off. It may be smart to repay your smallest bill first, as it will give you that motivating sense of progress and begin to affect your credit score, but if you have a large loan accruing extremely high interest, it could be sensible to chip away at that loan first. Weigh the pros and cons for your particular situation and schedule your upcoming payments. This may look like setting up an automatic withdrawal on payday, setting end goals for paying off particular loans, or placing reminders in your calendar for when your next payment is due. As you show your lenders that you're capable of paying them back, your credit score will start to improve.
2. Don't cancel your current credit cards
Cancelling your cards can actually do more damage to your credit score! Instead of cutting them up, use your credit cards on occasion for small expenses that you can pay off immediately. Showing consistency in paying off these small amounts every month will increase your credit score and prove your trustworthiness to future lenders.
3. Keep your credit use to a minimum
Whenever possible, use less than 30% of your credit limit each month. Keeping a low balance on your card is one of the best ways to raise your credit score, so whenever you need to use your card for a large purchase, pay off whatever portion you can as soon as possible. After you've proven your reliability with the card, you can request a credit increase, and in turn, increase that 30% threshold.
4. Work with an understanding, responsible lender
Finance One specialises in bad credit car loans, so chat with our team about the options available to you. We understand that anyone can end up in a financial bind, and repairing one's credit score takes time - sometimes you can't wait for the loan you're after. Let us know your situation and we'll do our best to help you. By repaying a bad credit car loan on time, you'll improve your credit score and pave the way for smooth approval process on future loans.
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