If you thought fixing your credit score would be costly or complicated, think again. There are a few simple ways to repair your credit, from taking out new credit to debt repayment tactics and better financial management overall.
While fixing poor credit can take some time, it’s definitely doable with a few simple strategies.
What Exactly Is Bad Credit?
Credit is one of the primary determining factors lenders use to decide whether to approve a loan applicant. It reports your repayment history, debt history, credit amounts, and lender information.
Bad credit is when this report highlights certain patterns in poor repayment behavior, like multiple credit applications, late payments, or even bankruptcies. As a result, lenders could look at a poor credit report and potentially either decline the loan or offer a higher interest rate to outweigh the lender’s risk of approving the loan.
What Determines Credit Scores?
Lots of factors determine a credit score. However, the biggest one is repayment history. A credit check will look at your repayment behavior across all credit you’ve ever taken out, looking out for missed or late payments and bankruptcies.
Other factors determining a credit score include the total amounts owed—or how much debt you currently hold across accounts—and the length of your credit history. A short credit history doesn’t contain enough data about your repayment history to make an accurate score, but a long history will give a fuller picture and help your credit score.
New credit applications are another thing that impacts your credit. Many new applications in a short period can reflect poorly on you.
Credit reports also take the types of credit you hold into account. It’s good to have a balance of credit that includes loans, credit cards, mortgages, auto loans, and so on. This shows you can be a responsible borrower and manage multiple types of debt comfortably.
So, Can I Fix My Credit for Free?
Yes, you absolutely can.
There are a few ways you can heal your credit score, including:
- Taking out credit and repaying it on time
- Checking your report for errors
- Paying down current debts
Taking Out New Credit
It may sound counterproductive at first glance, but the key to rebuilding your credit is to start taking out small amounts of credit and ensuring you pay them on time. Simply leaving bad credit and doing nothing won’t repair it because you need your report to also show examples of good payment behavior.
Payment behavior is one of the biggest things that impact a credit score. So if you can take out a new loan and prove you can repay it responsibly, it will help repair some of the damage.
Taking out a loan is one of the simplest ways to fix bad credit—especially with lenders like Jora offering bad credit loans.
Learn more about how a loan can help your credit score.
Check Your Credit Report for Errors
Sometimes errors can occur on credit reports that can detrimentally affect your credit score. However, if you contact the credit bureaus, they can open an investigation into the error and rectify it. The sooner you do this, the better. So it’s worth checking your credit report regularly to ensure everything looks right.
Pay Down Current Debts
One of the best ways to fix your credit is to pay down any current debt. Ideally, you want your credit utilization ratio to be less than 30%, so anything you can do to reduce debt will help to fix your credit. This could involve making cutbacks in your budget and increasing repayments, using a strategy like the snowball method or even taking out a debt consolidation loan.
A debt consolidation loan involves taking out a large loan and using it to pay off all your other debts. You then have one single debt and interest charge on just one loan. This means your loan is cheaper and will be faster to clear—which will help you to repair your score.
Bad Credit Loans From Jora
Due to its accessibility, taking out a bad credit loan option like Jora Credit is one of the best options for those looking to fix their credit score.
Poor credit can be a difficult trap, but more lenders like Jora are opening up their eligibility criteria to include those with poor credit scores who have been turned away from traditional lenders in the past. With a Jora loan, you can start to rebuild your credit score.
Learn more about Jora Credit or start the simple application today.