Most of the time, when you find out you have bad credit, you have just applied for something important–like a credit card, mortgage, or car loan–and were rejected. In addition to throwing a wrench in your plans, finding out you have bad credit can make you feel stuck with no way move forward. Fortunately, there are steps you can take to rebuild your credit and improve your credit score.
What to do when you find out you have bad credit
The first thing you’ll want to do is obtain your credit reports and credit scores. You can get free copies of your credit reports once a year from each of the major credit reporting agencies, and you can check your credit scores for free every month on credit.com. Next, you want to keep in mind that the path to rebuilding your credit is a long one. Credit repair does not happen overnight. That being said, it is possible and worthwhile to get your finances back on track.
Steps to rebuild your credit
The process of improving your credit can vary depending on your credit score issues, but here are some tips to get you started:
- Figure out what is damaging your credit score. The main credit factors are payment history, credit utilization, age of credit accounts, mix of credit accounts, and history of applying for credit.
- Attempt to clean up your credit report by disputing mistakes with each credit bureau.
- Since payment history accounts for the most impact on your credit score, you should make plans to catch up on your payments as quickly as possible.
- Going forward, you’ll want to pay special attention to your bills and their due dates so you can avoid missing future payments.
- Do not close your credit accounts. Instead, keep the accounts you have but avoid using them until you have completely paid off the balance. This can help boost your score based on the age of your accounts.
We hope this helps you get started on a path toward rebuilding your credit and improving your credit score. If you would like additional information on how your credit may affect your ability to obtain a car loan, please do not hesitate to get in touch with our team at Seacoast Mazda.