It is hard enough to even get a mortgage, car loan, or personal loan with bad credit, let alone decent interest rates, but what if your monthly bills are now affected. With risk-based pricing, companies such as your mobile phone, internet, cable, or even insurance are using your credit report to decide which terms they will offer. You might be wondering how they are able to do this, but as long as you are informed, probably somewhere in the small print of your contract, it is completely legal. If you find yourself in a risk-based pricing model, and you have bad credit, you need to now find a way to improve to get better pricing.
Check Your Credit
If you receive notice that the less favorable terms you received are based on negative information from your credit, the first way to see how your credit is affecting you is to pull your credit report. Every year you are entitled to a free copy of your report from the major credit bureaus where you have the right to dispute any errors that you notice. Credit scores are not given on these reports, however, but now most of the major credit card companies are offering your free credit score just by logging on to view your statement.
Have a Plan of Attack
Once you verify that your poor credit is accurate and you face the facts, the next step is to improve it. This does not happen overnight, it takes months and years to have a solid score. Start by making sure that all of your monthly payments are made on time and have a solid payment history. Do not open up a lot of new credit as each pull will lower your score. Pay down the accounts with the highest interest first so that each monthly payment will go towards less interest eventually.
A monthly budget is the best way to reduce unnecessary spending habits so that more money comes in each month than goes out, therefore reducing the debt that can pile up each month. Using debit cards instead of credit cards will allow you to only spend what you have, instead of the seemingly endless amount of credit available to keep spending on. It is not easy, it does not happen overnight, it takes planning and discipline, but if you are dedicated on improving your credit, you will see results.