Having bad credit can be a nightmare to fix and can be embarrassing due to the stigma placed on people with bad credit. Whether your credit score is the result of irresponsibility or misfortune, there are ways you can get your credit score going in the right direction.
Be Selective About Secured Credit Cards
Partially or fully secured credit cards can work wonders on your credit score, but you need to choose the right one. Cards that are not issued by well-known banks or credit card companies are ones you should avoid. You want a card that reports to all the major credit-reporting agencies. This is the only way you will improve your credit score. With a secured card, your credit limit is the amount of money you load onto the card.
Since several hundred dollars can be difficult to pay at once, some companies allow you to add money to the card in installments. Of the reputable cards, look for the lowest interest rate and most reasonable fee schedule. In general, successfully managing at least two secured credit cards will raise your credit score quicker. Once you have a good reputation with your secured card for at least a year, ask the card issuer if you qualify for an unsecured card.
Borrow Money You Don't Need
If you can find a payday loan that will report to credit reporting agencies, this is another opportunity to improve your credit. Look for companies that do not charge a penalty for early repayment and have fees you can afford. Take out the smallest payday loan and simply use the money to repay the loan. You will need to use some of your own money to pay any interest and fees. Periodically borrowing small amounts of money and having this information reported to credit-reporting agencies can give you a slight boost in your credit score.
Keep Up Major Bills
Make sure you are paying housing and utility bills in full and on time. When rebuilding your credit, it can be easy to focus on obtaining and paying credit card bills and think being a few days late on your utilities does not make a difference. Although having bad credit can reflect negatively on you when applying for jobs or housing, you are more likely to find leniency from a future employer or property owner for late credit card bills, but impeccable housing and utility bills.
Don't Fall Into Traps
When you are desperate to rebound from bad credit, it is easy to fall into numerous bad credit traps. There are credit cards on the market that promise you an unsecured credit card, no matter how bad your credit. If you look closely, some of these credit cards are not real credit cards, but are charge cards for specific stores that sell over-priced merchandise. Other credit cards make you pay a high fee before activating your card, and the monthly and annual fees absorb most of your credit line. Since the fees are unreasonably high, it is easy to go over your credit limit.
If you have already applied for and activated a card with unreasonable fees, dedicate the next few months to paying off the card entirely and closing the account. You may need to work quickly if it is almost time for another annual fee. Make sure you take the appropriate actions to close the account once the balance is paid. Typically, you will need to make your request in writing. Not using the card is not the same as closing the account, and you will continue to be liable for any monthly or annual fees, and interest that is added onto those fees.
Improving your credit score after serious delinquencies is difficult, but not impossible. Knowing which strategies will give you the best results for your efforts can help you raise your credit score quicker, and prevent you from falling into traps.