If you are trying to get a personal loan and have bad credit, then you know it can be quite difficult. It’s not getting the money that is hard, it’s getting the money at a reasonable interest rate that’s hard. You can get a loan from hard money lenders for example even with bad credit but you will probably get charge a ridiculously high interest rate. In order to improve your situation, you will need to improve your credit score. So when asking “how to improve my credit score” – here are some tips on doing so.

The first thing you will need to do is to get a free copy of your credit report. The reason for doing this is so you can check to see if there are any mistakes on there. Many times, you will find that there are indeed some errors such as balances that you paid off some time ago that are still showing on your report or even balances that you never accrued in the first place. If you find an error, you will need to write a letter to whichever of the three credit bureaus has your information wrong.

While you’re fixing whatever needs to be fixed, you will need to start looking at your monthly budget and seeing how much money is coming in and out. By keeping track of where the money flows, you will be able to allocate more of it in the right places. In this case, it would be to paying down your debt. The higher your debt to credit limit ratio is, the worse your credit score will be. You will want to try to bring your balance down to 50% or less. Ideally, you want to be below 20%. This means that if you have a credit limit of $5,000, you don’t want to owe anymore than $2,500 and ideally, you will want to stay under $1,000 (same ratios go for if you want to get a 1000 loan). In order to this, you will need to manage your money better.

The most important thing to do is to always pay your bills on time. Even one late payment will hurt your credit and in some situations, that’s all it takes to set off a chain reaction that can ruin your finances.  The late fees can build up, interest rates can increase, and the next thing you know, you’re in trouble.  For sure when it comes time to buying your dream home, you’re going to want to be able to get good credit mortgage loan to get great interest rates – so it pays to pay on time.

Hopefully, these tips will help you improve your credit score to help you get a 5000 dollar loan or any other amount that you may need in the future.