A poor credit rating is not something that an individual strives to obtain.
Often times good and responsible people find that circumstances beyond their control lead to credit problems.
Fortunately, by changing spending habits and working hard to pay off debts, a credit rating can be improved.
Make positive changes to your spending habits
In order to improve your credit rating or to maintain a good one once it is achieved, you need to change your spending and credit habits starting today.
Examine how much income you have coming into the household each month compared to how much is going out.
If your expenses are almost as much as you earn each month or if they actually exceed your income, you need to cut down on expenses immediately.
Some quick ways to cut expenses are to give up or downgrade services that are not necessary.
For instance, you do not really need 150 channels of television to watch. Eat out less often and buy off brand name products.
Be committed to reducing your outflow of money each month in order to get out of and to stay out of debt.
Obtain a copy of your actual credit report
If you suspect you have poor credit, you will want to obtain a copy of your credit rating so that you know exactly where you stand in terms of your credit.
Obtain your credit rating by requesting your free credit report by visiting the Annual Credit Reporting Site.
View your credit report to ensure that there are not any suspicious entries. Make certain all debts listed are actually your debts in order to protect yourself from identify theft.
You will also want to scan your credit report to make sure that the reporting agency does not have any inaccurate information listed.
The above-mentioned websites will provide information on how to dispute details or to have details corrected on your credit report.
Take a different approach to credit cards and lines of credit
Use the credit to get yourself out of trouble, not into a deeper financial crisis.
Stop using credit as a way to own things that you really cannot afford.
If your poor credit rating does not prevent you from obtaining a credit card, you should apply for a card.
You will use this card to make common purchases each month and then pay the balance in full each month.
This will help you to reestablish credit by showing creditors that you can pay your bills on time each month.
Use this credit card only for purchases you can pay off at the end of each month.
Never use a line of credit or credit card for anything that is not a necessity or a means to improve your credit rating.
Pay off debts
Work to pay off your debts. Apply for as much extra money as you can to credit cards and other creditors each month.
You can pay off your balances much sooner and in the end pay back less interest.
As your debt to income ratio improves, so will your credit score. You should also work to make arrangements to pay off bad debts.
In some cases, if you work with the creditor or collection agency to pay off your debt in a timely manner, they will change their report on your credit rating to show that the debt was paid in full and no longer delinquent.