If you had major credit problems in the past, you need to show that your current financial standing is no longer in the state that your history represents. Some events can happen in life, such as divorce and bankruptcy, often unavoidable. While they can severely affect your credit score at the time, most people will move on from those events and get more balance in their life. Such financial problems are unlikely to happen again with good financial management. You must be prepared to fix these mistakes when applying for loans.
Events like those listed above can negatively impact your score. Taking action right away and correcting your credit score can prevent those events from hindering your process in the future.
What do you need to expect with these credit issues?
A bad credit score from events like this is like getting back on your bike when you fall off. You will need to take out a small loan and pay it off as soon as possible to get back on your ‘financial feet’ and prove to potential lenders that you are no longer at high risk. Whenever you get another loan and pay it off on time without missing any payments, you prove that you are not as risky as your credit score might suggest. The more often you do this, the easier it will become to gain credit, and you can work your way up to bigger loans at lower interest rates as your FICO score improves.
Expect to be met with some resistance when you first apply for loans after having a significant financial upheaval. Still, you will find that there are always some people who will be willing to lend you money, albeit at high-interest rates.
What is the best credit score strategy?
It is best to have a small loan and pay it off as soon as possible. By doing this, you can prove that you can make your payments, then gradually move up to bigger loans once your score has gone up. You will probably find that getting a credit card with a small limit is the best way to go at the beginning. From there, you can move up the credit ladder and start receiving more beneficial offers. If you want to speed up this process, get in touch with a credit repair specialist today.