How to keep a good credit score when you are broke

Holicent

VIP Contributor
In the United States, credit scores are used to determine whether you are a good borrower or not. A high credit score will allow you to get loans at lower interest rates and help you qualify for the best financial products.

Having a bad credit score can mean higher interest rates on loans, difficulty refinancing your home and even trouble getting a job. When you have no money in the bank and little income, it can be hard to keep your score up. Here are some ways to keep your credit score high when broke:

Rent instead of buying a home. If you have bad credit or no money down payment, renting makes more sense than buying a house. With rent, you aren't making such a huge investment all at once, so there isn't as much risk involved if things don't work out between landlord and tenant. You can also move if needed without having to worry about selling the property first. Renting also gives you more flexibility than owning does because it's easier to pick up and go when necessary.

Don't use your debit card unless absolutely necessary. If you're trying to save money and avoid spending on impulse buys, using your debit card can be dangerous because it seems like free money that doesn't count against your budget. Make sure your bills are paid on time!
 

Abigael

Valued Contributor
Being broke is such a tough moment for someone who want to keep a high credit score. This is the time when you are most tempted to borrow yet you don't have a plan on how to pay back. Which will get you into so much more borrowing and even taking loans to pay debts, it becomes a closed loop of loans and brokenness.

I say that the first step to keeping a credit score high is having so much self discipline so that you don't fall for the urge to borrow. Self control will help you stop impulsive spending and taking loans. Whenever you get the urge to buy something and you are broke, just say no to that urge and your self discipline will grow stronger.

Then you need to make it a habit that you will earn the money you need rather than borrowing it. When you focus on making money, building a good credit score gets easier. You will be bringing in the money rather than taking it out.

Also, having money in your account makes you so much more trustworthy than when you are taking loans yet you have nothing of your own. Having a good credit score will be so helpful to you when you need to take a very important loan.
 

Mika

VIP Contributor
Your credit score will be determined by a number of factors such as your loan and repayment, credit card usage and bill payment, and all other outstanding credits. If you have never taken any loans and never used a credit card, the credit bureau cannot compound your credit score. In order to improve your credit score, you need to get loans multiple times, you need to pay your loans on time, you need to use credit cards, and never use credit cards more than 30 percent of the available limit, always pay your full bill amount on time. If you are broke and if you are not using any financial services, loans, and credit cards, how can the credit bureau analyze your credit reports and create a credit score for you? A credit score is not related to your financial status, it is in fact related to how you access credit services and how you pay your debts.
 
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