You may be asking yourself how you got to the point of searching for personal loans for poor credit. The truth is that it’s not a single action that brings down your credit score; it’s a series of choices and common mistakes over an extended period, and it usually starts when you’re young.
In those early years of adulthood, a credit card is a dream come true! With the ability to make purchases that you’ve only dreamed of, you feel a sense of freedom that comes with adulthood. But after the initial months of 0% APR are up and the interest charges start accruing, reality starts to set in. Credit card debt can create an endless cycle of high-interest debt, minimum monthly payments, and maxed-out credit lines.
If you don’t break out of this cycle, you risk severe damage to your credit health and holding yourself back from living your life to the fullest. The good news is that Lendah has helped thousands break free from high-interest credit card debt and improve their credit scores.
What Causes a Bad Credit Score?
To improve your credit score, you have to understand what causes that number to decrease. Here are some of the most common actions that are detrimental to your credit health:
Depending on your financial situation, making payments on time each month can be impossible. Your creditworthiness is dependent on your reliability with credit card payments in your past. Credit scorers analyze your dependability and if you can’t make those payments, your credit score will take a hit.
High Credit Utilization Rate
A high balance on your credit card results in a high credit utilization rate. Credit scoring models often consider this when calculating a credit score. A high rate could be an indicator that you’re having trouble managing your finances and it can impact up to 30% of a credit score.
Charge – Offs
A charge-off occurs when a creditor takes an account off of their accounting books that they assume will never get paid. Don’t assume that this gets you off the hook for paying what you owe. The balance could be handed over to a collection agency and you will have to pay eventually.
Defaulting on Loans
It all comes back to creditworthiness. If you default on a loan, it’s not showing that you are responsibly handling your debt. Unfortunately, credit scoring models don’t take inflation, financial struggles, or emergency repairs into consideration. That’s why you need help from humans to overcome your poor credit health.
Learn about Lendah, the premier lender of personal loans for poor credit.
Three Steps to Improved Credit Health
1. Pay On Time
We understand that it can be a struggle to pay on time each month. Our best suggestion to keep consistent payments is to move your payment date to a day when you know you will have the funds each month and set up an automatic payment.
2. Keep Your Credit Utilization Rates Low
The credit utilization rate is how much you currently owe divided by your credit limit. As mentioned earlier, you want to aim for about 30% credit utilization. Even if you can’t pay off your full balance, decreasing the utilization rate will help your credit score.
3. Consolidate Your High-Interest Credit Card Debt
Debt consolidation loans work to pay off your credit card debt and free you from astronomical interest charges. With a personal loan for bad credit from Lendah, you can consolidate all of your credit card debt into one fixed monthly payment which allows you to budget accurately each month and keep up with your payments.
Personal Loans for Poor Credit From Lendah
Lendah is dedicated to providing personalized loan programs for anyone struggling to get out of debt and improve their credit score. Through our 30+ direct lenders for personal loans for poor credit, we can help you improve your credit score.
To learn more about how Lendah works, visit our website. You can also fill out a simple application to begin the debt consolidation process with Lendah.