If you want to improve your credit rating, you will need to do so over time, but if you take steps to repair credit history right away, you'll soon see a significant improvement. Here are 3 steps you can take immediately, which will set you out on the right track;
Step 1 Start Paying Off Your Debts
Even if they seem overwhelming and you have a limited income, the sooner you start to clean bad credit by making regular repayments, the sooner your credit report will improve. Contact the organizations to which you owe money and come to an arrangement to pay the debt off at a rate which is manageable for you.
Step 2 Do not Take on Any New Loans
No matter how much you want something or feel you deserve it, do not take on any major loans until your credit is in better shape. Put aside some money each month towards the new car or the overseas vacation. You'll enjoy them much more when you are feeling secure about your finances than if you are living with the knowledge that you have wound up deeper in debt to get them now.
Step 3 Plan for Financial Emergencies
Financial emergencies, whether small or large can play havoc with your credit score if you do not plan for them. Obviously, you do not want to be negative about the future and anticipates all sorts of shortcomings, but the reality is, that all of us experience financial emergencies from time to time.
This could be something as small as having your cell phone stolen and the thief running up a bill of several hundred dollars (this one happened to me). Or it could be something as large as being diagnosed with a serious illness which has a serious impact on your ability to earn a living. I've experienced this one too.
The way to plan for any type of financial problem is to live within your means and if you can, set aside some money to cover potential emergencies. It's just common sense – work out how much money you have coming in and how much you pay in rent, bills and other essentials. Then work out what is left over for entertainment and luxuries and do not go above the limit. If you do not spend it all, save it in a special account which you do not touch except in an emergency.