If you’ve recently struggled with poor money management or simply haven’t had enough money to make your payments on time, your credit score has likely taken a hit. Late payments, non-payment and having high debt utilization all contribute to a lower credit score and once your score drops it becomes difficult, if not impossible, to gain new credit.
The good news is you can start improving your credit score without the use of additional or new credit accounts. Your priority should be to make at least the minimum payment on all of your accounts before the due date. Easier said than done, sometimes, but it is the only way to start improving a low credit score. If necessary, look for ways to increase your income and decrease your living expenses as much as possible while you start repaying your debt. Everytime you find a way to save money, use the money toward paying off debt. (Here is a useful article that offers 55 Ways to Save $1 per day to get you started!)
If you have accounts that have gone into collections, make arrangements with the collections departments to make payments on the accounts and get them paid up-to-date, and then pay them off at the agreed upon payment arrangement.
It’s a good idea to take a money management course, to help prevent this situation from happening again in the future. Your local library may have a free course offering, some community colleges and consumer credit counseling agencies offer free money management courses for consumers.
When your debts are all paid on time, you might consider at that point obtaining a new credit card or credit account that will report payments to all three credit bureaus. There are options for getting secured credit that will be useful for individuals with poor credit (they use the individual’s own money as collateral to obtain the credit).
Making payments on time, and reducing the amount of debt you have will improve your credit score.
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