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Managing your Finances and Credit

We all know how annoying it can be when we’ve got poor credit. Even doing simple things, like taking out a mobile phone contract can be a hassle. But just because you’ve got poor credit today doesn’t mean your credit has to be bad forever. Here are some tips for sorting it out and getting your finances back on track.   Tip #1: Don’t Use Up All Your Applications It turns out that every time you apply for a loan or credit, it impacts your credit score. And while that might sound strange, there is actually a good reason for it. Application frequency, at least according to creditors, is an indication of how healthy your finances are. If you’ve got good credit and always pay your bills on time, then the number of times you apply for credit is likely to be low. If, however, you’re always getting turned down even though you make a lot of applications, it’s a sign that your credit risk is high. For instance, many people will go to different networks and apply for mobile phone contracts, only to be rejected at every stage. They believe that by applying to multiple vendors that they are increasing their chances of getting accepted, but in reality, they are just hurting their credit score. One way to get around this problem completely is to apply for contract phones with no credit check whatsoever. These applications won’t count against your application total, and so your current credit score should remain intact.   Tip #2: Check Your Credit Files After Rejection If you are rejected on the basis of your credit score, it’s a good idea to make sure that there hasn’t been a mistake. Every year, thousands of families are denied credit because of errors on their record.   When you’re rejected credit, you should be informed which credit agency the lender used to access information about your creditworthiness. Focus on this agency and find out whether all your details are accurate. Sometimes it is possible to get the lender and the agency to reassess your ability to repay, but it’s not always easy.   Tip #3: Use A Credit Card To Rebuild Your Score Credit scores can be a difficult thing to improve. In order to improve your credit score, you need to be able to take out credit to prove to lenders that you are capable of borrowing and repaying the money. But without a good credit score in the first place, it’s almost impossible to get credit. It’s a classic Catch-22 situation – and one that often seems tough to get out of.   The best solution is to use a credit card to rebuild your credit score. Credit cards are available to people who have bad credit scores. Be warned: the interest rates on these cards is high (perhaps more than 35 percent a month). But the good news is that you’ll never pay those high rates of interest if you pay off your card in full every month. Just put a small amount of money on the card, say £50, and watch your credit score rise every quarter.  ]]>

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