The credit score of an individual plays an important role in determining his/her eligibility for a certain type of loan. People While a good credit score makes one easily eligible to seek finances, a negative credit score does just the opposite. Though a majority of lenders are apprehensive of extending loans to people with bad credit scores, this should not dampen the spirits of an individual from seeking loans to meet his/ her necessities. Bankruptcy or a poor credit score is definitely not the end of the road. There are companies that specialize in providing bad credit loans to the customers. Apart from that, with proper knowledge and application over a period of time, an individual can improve his credit score and become a preferred customer for the financing companies yet again.

Firstly, it helps to find out the cause of a low credit score. Figure out if your demands are more than what you can afford, whether you are an extravagant spender, or do you save enough. Reasoning these out will certainly help in finding a way by which you can curb your expenses and have a control on your finances.

Have a good look at your credit report. A credit report is a cumulative report based on the payment history, length of credit history, amounts owed, type of credit and any new credit opted for. Check if there are any errors related to the record of transactions carried out by you. In case of such errors, correspond with your reporting agency and ask for a detailed investigation to fix the problems.

Try to improve your credit scores by paying the bills on time. Clear up the past due bills, if any. Get in touch with your creditors and work out a payment plan that meets the interest of both the parties. Try to minimize your credit card balances and pay off the debts rather than opening new accounts which can in turn lower your credit score. However if you have zero balance unused accounts, do not close them as it might do some good to your overall credit score.

A low credit score holder finds it difficult to qualify for an unsecured credit card or an auto loan. In such a case, a secured credit card is a wiser option. Secured cards give a credit limit that is equal to the amount you have at the issuing bank. Make sure the secured credit card has a reasonable annual fee and also reports your transactions to the major credit bureaus such as Equifax, Experian and Transunion. Your credit score will only improve if your payment details are reported to these credit bureaus. With regular payments one can get the secured credit card upgraded to an unsecured one in a years time. People intending to buy a car can opt for specialized auto loans such as bad credit car loans. These loans charge a higher rate of interest than the general ones but on-time payment of EMIs for a bad credit car loan certainly helps the credit score. Once the score improves, a customer can refinance it with a general car loan that charges a lower rate of interest.

There is nothing to feel downhearted and devastated when you have a low credit score or have run bankrupt. Rather, this should be taken as an opportunity to re-plan your finances in a better way. A wise and strategic approach towards your finances will definitely help you to overcome this temporary phase by improving and building up a good credit score.