Bad credit can derail your ability to buy a car, get a new job, or even rent an apartment. But it doesn’t have to be the end of the world with the right strategies, you can rebuild your credit and start moving forward again. In this article, we’ll show you five ways you can rebuild credit even if you have bad credit and get back on track toward financial success!
1: Pay Down Existing Debts
No matter how large or small the balance on your credit card is, it’s important to pay it down as much as possible. By paying off a smaller balance, you’ll reduce your total amount of debt and improve your average monthly balance. Paying down a larger balance will help to increase your average monthly payment, which will help to improve your FICO score over time.
You can also work to pay down existing debts by getting on an affordable repayment plan. You may be able to lower the interest rate on a loan by refinancing the loan with a better offer, so make sure to compare rates before making any decisions.
2: Open A Secured Credit Card
Secured credit cards are a good option for rebuilding your credit if you have bad credit. With these, you put down a security deposit that’s typically equal to the amount of the card’s limit. For example, if your limit is $1,000 and you put down a $1,000 deposit, then your available line of credit will be $1,000. Secured cards also come with lower interest rates than unsecured loans or credit cards because there’s collateral involved. However, secured cards require an excellent repayment history before they’ll consider boosting your limit or reducing the deposit required.
3: An Authorized User To Your Account
There are a lot of reasons to add someone as an authorized user to your account. For one, it’s the easiest way to get back on your feet after bankruptcy. It also helps build their credit history since they will be able to use your card and make purchases on your behalf of you. it’s a good way for them to learn about budgeting and handling money responsibly, which is important for people with bad credit who are looking for loans in the future. If you’re worried about them being irresponsible with your card or spending too much money, make sure that there are limits set for their use so that they won’t exceed what they can afford.
4: Get An Unsecured Personal Loan
An unsecured personal loan is one of the best options for rebuilding your credit. They’re typically easier to get, and you don’t need to be employed or have collateral to apply. The good news is that there are many lending sources now, so shop around and find the one that offers the best rates and terms for you. Once your loan is approved, pay on time every month to build a good payment history. If something goes wrong, don’t give up! You can take out another loan and start over again with a clean slate.
Bad Credit Loans Another option is getting bad credit loans – either secured or unsecured. When you apply for this type of loan, the lender will look at your income, employment history, and repayment record before deciding whether to lend money to you. Secured loans require you to use property as collateral while unsecured loans do not require any kind of security. Bad credit loans usually come with higher interest rates than other types of loans because lenders view them as riskier ventures.
5: Check Your Free Credit Report
It’s important to know what’s in your free credit report so that you can start to make changes to your credit. You will be able to see the items on your report such as unpaid bills, balances, and inquiries. It is also recommended that you check all three of your reports from the major reporting agencies. If there are any errors on your reports it is up to the bureaus for corrections. You should also review how much debt is owed and how long it has been since payments were made on these accounts. It is not uncommon for some people with bad credit loans to be wary about checking their reports because they think it will show them a list of negative information which could lead them into a downward spiral.