So You Found Out You Have Bad Credit. Here’s the Good News.

 

Whenever something bad happens, people start looking for good things to make them feel better, or to make the situation less worse than it already is. But in some cases, no matter what you try, the bad situation will not get any better. If you have bad credit, then stop trying to muster up some feel good potion for your problem, because it can be fixed. And with a little work you can even work your way back up to an excellent credit rating. 

 

Check Your Credit Report

 

The reason for having such a low credit score might not even be your fault. It could be something on your credit report that doesn’t belong there or that you can have taken of. But if your low credit score is from something that you have done in the past, at least now you know what needs to be fixed and how to improve it. Your credit report is your “report card” that lenders will look at to see how responsible with your money. Trying to repair your credit without looking at your credit report is like trying to find a light switch in the dark. Your credit report will give you the information that you need to help you get back to being financially sound.  And there are plenty of options where you can get your credit score for free.

 

Use Credit Cards to Your Advantage

 

If you already have credit card debt then you want to try and pay it off as soon as possible. Balance transfer cards are a good option but you need to have good credit in order to obtain one. It may seem like a bad idea, but opening a new credit card could help. But you have to be strict on paying it off in full each month while also paying down the debt on your other cards. Part of your credit score is the length of your credit history, and the longer you are in good faith with your new card the better.

 

If you don’t have a credit card and have bad credit then get one. Again make sure to pay it off each month and use it to improve your score. It doesn’t matter how much money you spend on it each month, its just the fact that you pay it off on time. Because you have bad credit obtaining a credit card can be difficult. A secured credit card is a good option, or even a branded gas credit card. This way you can use your new card to build and improve your card. The same goes if you have never had a credit card and have no credit history.

 

Use an Installment Loan to Your Advantage

 

Since you already have bad credit it may not seem like the best idea, but taking out a loan for something (and making all of your payments on time and in full) greatly increase your credit score. It shows lenders that you are improving in both types of loans, revolving being your credit card, and installment being a loan of some sort. It does not matter how much the loan is for (it could be a small personal loan from your bank) it is just that you prove that you can be responsible with it.

 

Make a Payment Plan

 

If you have outstanding debt of any kind, come up with a plan to pay it down. Even if you can just offered to make the minimum payments do so. Missing a payment will cripple your credit score and it is very hard to have the other tools listed help your score if you keep missing payments. You want to always make the largest payment that you can because you are paying more and more in interest the longer you wait. Debt will hinder you improving your score and the sooner you can be debt free the sooner you will be on your way to a better credit report.

 

If you already have bad credit then these are some great tools to start working with to help improve it. It’s all about making a plan and sticking to it. And the sooner that you start the sooner you will see results. If you are in debt it is scary to think about getting another credit card. But you still have to spend money daily to live. Think about how you already do this and utilize a new credit card, not to spend anymore money than you are already doing, but to improve your credit history. It is this kind of mentality that will get you back to an excellent credit score and getting more out of your money.

 

Matthew Coan is the founder of the startup website Casavvy.com. A site that helps people get the most out of their money by showing them the best options for credit cards, checking accounts, and savings accounts.

 

 

 

Tags: Credit card, Credit history, Credit score, Installment loan

Category: Credit