Those with bad credit commonly feel like they have few options when it comes to getting car loans or other forms of financial assistance. Yet there are a few things they can do that can help them improve their scores and get into better vehicles, according to a credit expert.
Eddie Johansson, president of Credit Security Group, said that those dealing with bad credit usually have a few misconceptions about how credit works. He recently outlined three key fallacies, knowledge of which can help those with bad credit improve their scores.
The main misconception is that getting caught up on payments after paying late doesn’t hurt the score. Johansson stresses that any late payment lowers the score, even if buyers get caught up later. Related to that is the second misconception – that smaller payments impact the score less than larger ones. Yet credit isn’t a measure of how much you owe, but rather a consumer’s general behavior toward paying on time – so a missed payment is the “same for a $1 late payment as a $1,000 late payment,” he said.
A third mistake is that many believe that closing credit card accounts will improve their score – but buyers are actually closing off an avenue to help them improve their credit. The best way to improve one’s score is to routinely make payments. By keeping credit cards open and only using them for small purchases that are paid off every month, buyers can see their bad credit score increase dramatically.