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6 Ways To Defeat Bad Credit Score

6 Ways To Defeat Bad Credit Score

Know in advance: it won’t be easy. Improving credit scores are not immediate, and will require a hefty length of time to fix. This is because lenders, institutions, and issuers evaluate your past years’ behavior and actions, taking your entire credit history into account.

Not everyone has great credit, and there’s no shame in that. Of course, life happens, and there are circumstances some people genuinely cannot avoid. It’s a tragic credit scenario that’s happened to many people.

A typical business scenario is in the construction industry where surety bond come into play when contract price exceeds $100k.

“A surety (insurance company) bond is necessary to make sure that business owners (principal) performing the task follow specific requirements as laid in contract by the oblige (entity).”

Surety will weigh the risks of “taking you on” depending on your credit score – and decide whether or not your credit is worth the hassle of issuing you a bond or not. So, your credit score will determine the fate of your business.

If your credit score is above 750… congratulations! You have excellent credit. Any account below 650 is generally considered to be less-than-appealing to issuers and lenders.

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At the lower end of the spectrum, people around the 300-600 mark aren’t doing so well. Where do you fall?

Below are several ways to help you increase your credit score so you can get back in your lender’s good graces.

1. Check Your Score

Not knowing what is happening on your credit reports is like not knowing what you spend your money on. It is simply bad practice, and spells disaster for your bottom line. Be sure to check for free annual credit reports every few months or so and stay up to date.

Something to keep in mind when you’re reviewing your scores is to see how much revolving credit you have, versus how much you actually use. The lower the percentage – the better your credit rating.

Please be sure to see if your credit card issuer accepts multiple payments over the course of a month. Certain issuers report the balance on your statement to the bureau. So, if you pay full balances every month, only one balance will be actually reported.

2. Keep Calm And Relax

No matter how annoying it may be to see negative information every time you get your credit reports, keep in mind that this information often has less impact on your credit scores over time.

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Negative information on your reports have less impact on your credit scores the more time passes. Barrett Burns, CEO of VantageScore, states that just because information stays for seven years, doesn’t mean that information is relevant each year.

For example, let’s suggest you miss a payment (which probably happened – it’s sometimes impossible to keep up to date in today’s world). Your score may drop, but will take around a year and a half for you to recover fully – falling far short of the “7 Year Fear”.

In fact, it’s generally wiser to focus on your good debt (that is, debt that you’ve handled well and paid). Focus on your good payments, it will outweigh your bad scores. Keep in mind that bad scores are, well, bad, but they are not a doomsday scenario that many people make them out to be.

Credit card expert John Ulzheimer suggests keeping old debt and good accounts on for as long as they are possibly allowed. The takeaway: do not close old accounts, whether you have a good or bad score.

3. Don’t Open Too Many Accounts

Opening new accounts rapidly destroys your credit. This is because newer accounts lower your average account’s age – widening the overall effect of your scores. Not to mention that it looks risky to credit card issuers (to them, they think you’re a scam artist for opening up new accounts).

Plus, new accounts—in all likelihood—won’t raise your credit score.

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4. Don’t Close Unused Accounts

Regardless of your good debt, bad debt, and credit score, closing accounts won’t remove your bad debt. We can equate this to asking your high school to remove your grades from report cards.

Closed accounts still show up on your overall credit report, and do more harm than good, as it shows issuers that you’re unreliable.

Closing unused credit cards accounts is an ineffective strategy for raising your scores. It simply won’t. In fact, many people have had their credit scores lowered by doing exactly that.

5. Go Fully Automatic

One way of doing this is by setting up auto-payment, or payment reminders so that you never miss them. Similar to setting up automatic payment for bills to be withdrawn from your bank account on certain dates.

I personally have a hard time remembering important matters such as these, even in my daily life. I cannot stress enough how important weekend reminders (even daily reminders) via Google Calendar are.

If you’re wary of going fully automatic, build a schedule for yourself using task management software such as Trello or Asana. I recommend Trello, as it’s an intuitive and easy-to-use system for managing tasks and to-do lists. It fits my on-the-go needs and lets me adjust my schedule accordingly.

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6. Don’t Be A Risk

For whatever reason, whatsoever, do not risk damaging your score. This means trying your hardest not to miss any payment, or suddenly paying in smaller amounts, or infrequently charging more. Maintain a good score by being consistent with your payment dates and payment amounts.

However, taking cash advances might make your card issuer wary without hurting your score. Know this: charging businesses to your card that give second doubt to your money-handling abilities also paint you as a suspicious client.

Dave Jones, former president of the Association of Independent Consumer Credit Counseling Agencies (AICCCA) warns that you do not, under any circumstance, give the impression that you’re a risk. As with anything in life.

Conclusion

Managing your bad credit scores isn’t as troublesome as many people make it out to be. All it requires is a determination and will to make your payments, consistently, as you agreed you would; not presenting yourself as a risk; adamantly refusing the temptation to open several accounts or close old ones; keeping your sanity as you handle your credit score.

Featured photo credit: via pixabay.com via pixabay.com

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Last Updated on January 21, 2020

How to Develop a Millionaire Mindset in 6 Simple Steps

How to Develop a Millionaire Mindset in 6 Simple Steps

We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

How do you go about developing that millionaire mindset? By following these simple steps:

1. Focus On What You Want – And Take It!

So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

Millionaires play to win, not to avoid defeat.

This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

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2. Become Goal-Orientated

It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

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If you are to become a millionaire, you need to start accumulating money.

Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

3. Don’t Spend Your Money – Invest It

The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

Stop working for your money and make your money work for you.

Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

There’s not just the stock market — there’s also property, and your own education.

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4. Never Stop Learning

The best thing you can invest in is yourself.

Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

Learn everything you can about how economics works, how the stocks markets work, how they trend.

Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

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5. Think Big

While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

Aim for the stars, if you fail you’ll still be over the moon.

6. Enjoy the Attention

To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

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Featured photo credit: Austin Distel via unsplash.com

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