For many people with bad credit, going to payday loan lenders may be their only option when they are in need of a loan, which can be very limiting. Rebuilding your credit will help you avoid this situation.
The process for rebuilding credit is a long one that requires patience and persistence. You need to be willing to make sacrifices at times.
Start by changing any habits that caused the situation in the first place. Stop paying bills late. About 35 percent of your credit score is based on your ability to make payments on time each month.
This is where a payday loan can help you. It can keep you from making payments late.
Don’t apply for credit you know has a low chance of being approved. About 10 percent of your credit score is based on credit inquiries. If you apply for credit too many times all at once, it will have a negative impact on your credit score.
You also want to check your credit report to look for any errors that may be on it. You can get one free credit report each year at annualcreditreport.com.
Look for accounts that you have closed that are showing still being open or for accounts that show as being behind that you have caught up with. Call the account holders that are showing up in error and have them correct the error.
Bad credit could force you to seek out payday loan lenders
If you have one or more credit cards, try to pay more than the minimum as much as possible. About 30 percent of your credit score is reflected in how much of your available credit is being used. The more credit you have available, the more your credit score will improve.
If you have been making payments to a credit card on time for a while, ask the issuer to increase your limit. This will increase the amount of credit you have available to you, which improves your credit score.
If you don’t have a credit card, apply for a card with a small limit. If your credit is not good enough to qualify for a normal credit card, apply for a secure credit card. You will need to deposit a certain amount of money into an account and you will be able to charge on the card as much as you deposit into the account.
Now you can establish your ability to be responsible with a credit card. Charge small amounts on the card each month and pay the entire amount off each month. Once you have shown you can consistently pay your credit card payments on time, you can ask to have the account become unsecured, which can have a better impact on your credit report.
Getting a credit card also can help your credit score because having a variety of accounts will help your credit score. However, a cash advance should be paid off as soon as possible because it can have a negative impact on your score, although not nearly as bad as making payments late.
Don’t bother with paying for a credit clinic that promises to “fix” your credit. These clinics can only do what you can do yourself for free. That money would be better served paying off payday loan lenders.