Michelle Summerfield • Jan 24, 2019
If you’re having a hard time making ends meet, it’s likely your budget and bank account are getting walloped. But there’s something else that might be taking a big hit — your credit. If this sounds like you, then you might be wondering how to improve your credit score on a limited income.
When you’re on a limited income, it’s easy to swipe a credit card when you’re feeling the pinch of your monthly budget. But here’s the thing, you could be swiping your way to bad credit.
A low credit score can impact you in several ways:
1. You may be on your way to higher interest rates, which makes it more expensive to borrow.
2. You may be jeopardizing your future and making it harder to get any more credit, like a debt consolidation loan.
But, it’s not hopeless. There are ways to improve your credit score and get back on track, even if you only have pennies left at the end of the month.
Here’s how to improve your credit score on a limited income.
Trying to improve your credit score might be challenging if you don’t know or understand what you’re trying to improve. By gaining a better understanding of what makes a good credit score, you’ll be on your way to improving it.
Here’s what goes into a good credit score:
Lucky for you, Borrowell recently launched the Credit Coach: Canada’s first free automated credit monitoring service to help you improve your credit score! The Credit Coach monitors your credit, analyzes your profile and even sends you tips on what you can do to improve your credit score. It all starts with getting your free credit score through Borrowell
The best way to improve your credit score is to make payments to your debt. It’s likely you’ve heard of the “side hustle.” It’s an easy way to bring in some extra income using skills you already have, or by selling things you might not need in your home.
Here are a few creative ideas to come up with extra cash:
Take advantage of community resources so you can cut back on an area in your budget. Myself? I love the library. They offer free internet, books, movies, digital music and movies, free access to online courses, and even employment help.
Sure, no one likes to do this, but it could just save your behind and your credit. Take the fear out of calling lenders by being open and honest about your situation.
If you’ve fallen behind on your payments, reaching out to creditors will help you find out what options are available to you.
Be sure to let creditors know as soon as you have trouble making payments, that way, you’ll avoid your account going to collections.
What are the most powerful things you can do to improve your credit score? Here’s two with a powerful impact:
The short and sweet of it? Paying your bills on time and in full are the most impactful things to improving your credit score. And neither requires a substantial income. That’s how you improve your credit score on a limited income.
No matter how hopeless things may seem, don’t get duped into quick fixes or magical debt loans. Your credit can’t be magically repaired overnight, so run from anyone that promises anything close to that.
Payday loans are another quick fix to avoid. Not only are they a costly way to borrow money (APR of 546%), using debt to pay for debt is never a good strategy. If you can’t afford to pay the debt you already have, how do you think you’ll pay yet another debt added to your list?
Remember: it takes time to repair your credit. If you can, keep making payments and do your best to stop adding more debt. And those of us with a limited income have the same opportunity as high-income earners to build good credit. Follow some of these tips, and you’ll be on your way to improving your credit score regardless of your income.
We hope we answered your question, “how to improve your credit score” on a limited income! If you’re still looking for some help improving that credit score, be sure to check out our new (and free!) automated credit monitoring service, the Credit Coach. The Coach breaks down your credit report and lets you know what’s needed to improve your score and makes product recommendation based on your unique credit profile and financial goals.
About The Author
Michelle Summerfield is a professional blogger and the creative director of The Classy Simple Life, a lifestyle design blog aimed at the 40+ woman. The blog started in 2012 and developed into a professional blog in 2017. In addition to documenting her journey to a simpler life, she covers topics such as money management, health + wellness, beauty, solo travel and thoughts on being a creative entrepreneur. Her work has been featured in The Globe and Mail, Toronto Life, and the CBC. To learn more about Michelle, visit her website here.
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Borrowell® is a registered trademark of Borrowell Inc. All Rights Reserved. The Equifax credit score is based on Equifax’s proprietary model and may not be the same score used by third parties to determine your credit profile. The score provided to you for educational use is the Equifax Risk Score.
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