If you’re struggling to make ends meet, the last thing you want to worry about is your credit score. Unfortunately, if you have to miss payments or default on a loan, your credit score will suffer. The good news is, you can repair your credit score after financial hardship by following a few simple steps.
- Check your credit report for errors.
If you’ve been through a financial hardship, it’s important to check your credit report for errors. If you find any, dispute them with the credit bureau. It’s also important to continue paying bills on time. This can help improve your credit score. In the meantime, think about opening a secured credit card. This type of card requires a security deposit but can help you improve your credit score over time.
- Make your payments on time.
One of the best ways to improve your credit score is to make your payments on time. Set up automatic payments if you have to, but make sure your bills are paid on time, every time.
- Use a credit counseling service.
If you’re struggling to make your payments, a credit counseling service can help. They can work with you to create a budget and help you get back on track.
- Get a secured credit card.
If you have bad credit, it may be hard to get a traditional credit card. A secured credit card can help you rebuild your credit score. You put down a deposit, usually equal to your credit limit, and then use the card like a regular credit card.
- Keep your balances low.
One of the factors that goes into your credit score is your credit utilization ratio. This is the amount of credit you’re using compared to your credit limit. It’s important to keep your balances low so repair my credit score utilization ratio is low.
- Don’t close old accounts.
When you close an account, it can hurt your credit score. It’s better to keep old accounts open, even if you don’t use them, so they don’t hurt your credit score.
- Use a mix of credit.
Your credit score is also affected by the types of credit you have. It’s good to have a mix of different types of credit, like a credit card, a mortgage, and a car loan.
- Don’t apply for new credit.
Every time you apply for new credit, it can hurt your credit score. Only apply for new credit when you absolutely need it.
- Be patient.
Rebuilding your credit score takes time. Don’t get discouraged if you don’t see a big improvement right away. Just keep making your payments on time and following the other tips on this list, and your credit score will slowly start to improve.