5 Reasons You Need to Repair Your Credit (and How to Get Started)
Your credit rating can have a huge impact on your life. Have you been on the fence about repairing your credit rating, or wondering where on earth you might even get started? There are several reasons why you may want to launch that credit repair as soon as possible.
1. Poor credit can make it hard to get those big-ticket loans.
If you are gearing up to buy a house or a car, you may find it difficult to get the loan you need if your credit is in shambles. Often, you may find yourself visiting multiple providers, only to have your claim denied each time.
2. Poor credit means higher interest rates.
Poor credit often means worse loan terms when you are able to secure a loan. Lenders see a poor credit rating as an indication that they are taking a greater overall risk when they loan you money. While some lenders are still willing to accept those risks, they may want additional assurance that you will be as safe a risk for them as possible. That may mean that you have to put more money down or that you will end up having to pay higher interest rates to secure a loan.
3. Poor credit can impact your other bills, too.
Did you know that your credit score can impact the rate you have to pay for auto insurance? Many car insurance providers now take a look at your credit before determining your rates. Poor credit could mean that you end up paying considerably more for your car insurance.
4. Poor credit means larger security deposits.
Any institution that checks your credit before approving you for a service or purchase may require a larger security deposit from someone who has overall poor credit. For example, many landlords will run your credit report before deciding whether they want you to move into their property. If you have poor credit, you may end up putting more money down as a security deposit than you would if you had better credit. Landlords may also pass over individuals with poor credit and choose, instead, to work with someone who has a higher overall credit score when they rent their properties.
5. If you have poor credit, you may have to use a co-signer to get a loan.
Often, poor credit means that you cannot secure loans on your own. You may end up reliant on friends and family members to co-sign on essential loans with you. If you do not have those vital co-signers, you may not be able to secure a loan, which may mean that you miss out on opportunities for a new home, car, or other large-ticket items.
How to Start Repairing Your Credit:
- Ready to start repairing your credit? There are several things you can do to get off to a great start.
- Check your credit report for any errors. Make calls and correct them where necessary.
- Pay down credit card debt.
- Avoid signing up for additional credit if you can while repairing your credit, since your score may drop as you take out more loans.
- Get in the habit of paying your bills on time.
Repairing your credit can be a long and involved process, but it is one that is well worth the effort. With these strategies, you can have your credit back to normal, and even end up with a high credit score, sooner than you may think.
