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The Express Lane Blog

The Express Lane Blog

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angle-left New Year, New Mindset: 5 Ways to Break the Bad Credit Cycle in 2019

For many folks, the New Year brings with it a new attitude to take on new goals and opportunities. For consumers who struggle with bad credit or no credit, it can also represent a fresh start for improving their credit.

While building or rebuilding good credit history is possible, it takes time, effort and discipline. If you’re a credit-challenged consumer who’s looking to improve your credit, here are five ways that may help you break the bad credit cycle this year:

  1. Create a budget and stick to it.
    Excessive spending is the easiest way to get caught up in the bad credit cycle. To help you spend within your means, evaluate your monthly expenses (i.e., mortgage or rent, utilities, student loan payments, cable, Internet, etc.) and come up with a realistic budget for your spending and saving.

  2. Set up automatic bill payments.
    Paying your bills on time — every time — is a sure way to improve your credit score. Setting up automatic payments and/or reminders can help you develop good credit habits and stay on track with your finances.

  3. Pay more than the bare minimum on your credit cards.
    Making minimum payments on your credit card balances can cause you to pay more interest in the long run. Paying more than the minimum or, better yet, the balance in full, is a good way to boost your credit score and build good credit history.

  4. Keep balances low on your credit cards.
    Since credit scoring models may look at how close you are to being "maxed out" on your available credit, try to keep your balances low in proportion to your overall credit limit. Experts advise keeping your credit card use at no more than 30 percent of your total credit limit.

  5. Don’t apply for credit cards you don’t need.
    Although it may help build your credit history, applying for a new credit card after maxing out your other ones isn’t good for your financial stability. Keeping your credit cards to a minimum and paying off the ones you already have is a good way to maintain discipline.

If you’re looking to build or rebuild your credit and are in the market to purchase a vehicle, a dealer enrolled on the Credit Acceptance program can help you get started on your credit approval today!