5 Ways To Overcome A Bad Credit History

Everyone makes mistakes when they are young, and many of us make some pretty hefty financial errors.  A bad credit history can plague a person if left unattended and unmanaged.  Milestones in life are much harder to achieve, and a bad credit rating can affect many other aspects of life.

Some employers even consider an applicant’s credit history when hiring new employees.  It is important to understand just how to escape from the struggles of living with bad credit.  Take a moment to look over a brief summary of a few excellent suggestions on how to overcome the effects of a bad credit history.

5 Ways To Overcome A Bad Credit History

Utilize the value of other assets

Just because a person may have a questionable credit history, does not necessarily mean that they have no valuable assets.  A life insurance policy or 401k are two alternative ways of showing the possibility of collateral.

It would benefit an individual to list such assets on a loan or credit application.  Cars, boats, and other household accessories are fit to serve as quality collateral but beware of simply complicating debt problems with such a method.

Show job stability to lenders

The best way to show a lender that an individual is a suitable candidate for a loan is to prove that they are stable.  Job stability is easy to prove, and pay raises should also be mentioned on the application.

Provide lenders with information pertaining to income and everything else surrounding the applicant’s financial health.  Showing job stability fares well in the minds of agents.  This is an especially effective tactic for obtaining an auto loan with less than perfect credit ratings.

Increase the down payment offer

It is increasingly important that individuals understand the importance of a hefty down payment.  The quickest way to turn the heads of potential lenders is to show them a large sum of money.

The larger a down payment is, the smaller the monthly payments will be when everything is said and done.  Increasing the down payment offer can also positively affect interest rates.  The object is to build rapport with lenders, and money speaks volumes.

Consolidate debt into one payment

If bad credit is negatively affecting other aspects of life, then a consolidation effort may be in the working.  Debt consolidation services are a dime a dozen, so it is best to do thorough research before choosing which company with which to work.

Lower credit utilization ratio

 Sometimes it is not the failure to pay debts that lower a credit score; it is commonly an effect of too many lines of credit being active at once.  When a person has ten different credit cards actively revolving credit, then it signals to lenders that the individual is spread too thin financially.

Posted in: Credit, Credit Card