Revolution Mother

Revolution Mother

May 2022 archive

Simple Steps to Restoring Credit and Paying Down Debt

It is all too easy to get into debt, fail to keep up the repayments, and end up with a poor credit rating that makes it difficult to get a loan or mortgage. We’ve all been through times that are financially challenging – perhaps being made redundant, for example – and the past couple of years have seen many people struggling to meet the demand for repayments. We want to give you a few helpful tips about how to start restoring your credit rating and also you should watch this YouTube video, so let’s talk about your rating first.

Keep an Eye on Your Rating

Your credit rating is determined by the way your past borrowing and repaying of loans and credit cards has been handled. If you have a past record of missing repayments, either on a loan, a card, or a mortgage, then your rating will be lower than if you have been regularly keeping up with the repayments.

But here’s the crunch: to have a credit rating at all, you have to have had credit! So, if you’ve never had a credit card, a loan, a mortgage, or any credit deal, you won’t have a rating! Check your credit rating now using one of the many sources and understand where you stand right now.

Apply for Credit Cards and Use Them

As we said above, you need to se credit to be rated. If you haven’t got a credit card and you are looking for a loan or mortgage, you may benefit by applying for one. If you have a poor rating, there are cards designed for you, but be aware the interest repayments will be greater. However, if you get a card and use it – and always pay before or on the due date – you are showing the lenders that you are a responsible borrower, and your rating will; improve.

Pay off More than the Minimum

The minimum payment on your loan or card will be a fraction of the balance. We recommend that to prove to lenders that you can handle your finances responsibly – which is what they want to see – you should always pay off more than the minimum. If you continually pay just the minimum the interest may well be greater, hence you will never pay off the debt. You should be aiming to reduce all debt to below 25% of the maximum in order to improve your rating.

Make Regular Purchases

Once you get a credit card be certain to use it. If you are buying a more expensive item – say a household appliance – use your card, and then pay off the entire amount by transferring from your bank account. This is a certain way to improve your rating in the quickest possible time. Use your card for regular purchases, and always pay off the balance, and you’re proving you are a worthy client for lenders.

We hope we’ve helped you understand the importance of a credit rating and how best to keep yours healthy.