How to solve bad credit

Do your outgoings consistently seem to be more than your income? Are you struggling to keep up? The chances are that your credit rating is suffering - and that can affect your chances of getting mortgage or loan approval. However, there are a number of things that you can do to solve bad credit.

Solve bad credit with these 5 steps...

1. Spend a little every month using your credit card. Lenders like to see a big gap between the amount of credit you're using and your available credit limits. Keep your balance below 30% of the credit limit and pay on time every time. Your credit rating should improve within six months.

2. Beware of having too many credit and store cards - limit yourself to a maximum of three. If you have more than one card, use each one lightly and try and spread your purchases over the cards. Building up high balances can hurt your rating, so keep your charges below 30% of the card's limit. Regularly check your balance to keep track of your spending.

3. Track down and pay any old charges that you might have lost track of. There could be an old bill that you missed when you moved house. If you don't think you owe the money, dispute it with the company or collections agency. Don't ignore it - it will continue to affect your credit.

4. If you have been a loyal customer it's worth trying to get some goodwill from the company you owe money to. They may agree to erase a late payment from your credit history. You usually have to apply for this goodwill adjustment in writing.

5. Go over your statements for any errors that may have occurred. This is a simple - but often overlooked - way to solve bad credit. It's always worth checking for late payment charges or collections that are not yours. Check the limits on your cards are the same as agreed. Make sure that any limit increases that have been approved have changed accordingly.

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