Bad credit can be a dark cloud hanging over your head, constantly following you around. However, your credit rating is not stagnant, and if you are patient, there are many things you can do to repair your bad credit. Before you take concrete steps to improve your credit, you should take a look at the factors that lead to your bad credit in the first place. If you can figure out your hot buttons, such as overspending, using a credit card for unexpected bills, or not paying your bills on time, you can work solutions to the problems into your improved use of credit.
The first step is to obtain copies of your credit reports from three credit bureaus and fix any errors. Normally, you will write to the bureaus, enclosing any proof of a mistake, and the credit companies will respond. This is a good way to way sure you can start with a clean slate and improve your score. You can find many sample letters to send to the credit bureaus online.
You should now take a look at your current bills, and make sure you are paying them all on time. If you have organizational problems with paying your bills, consider signing up for auto-deduction. Paying bills on time is a large factor in your credit score, and your score will steadily improve with a history of on time payment, so you will want to make this a priority. In a related area, if you find yourself turning to credit cards to pay your bills each month, you may want to see if there is anything you can cut out, or get a an additional part-time job to make ends meet. Relying on credit cards for daily expenses can contribute to credit problems.
Establishing new credit will also help improve your credit. However, you want to make sure you don’t open too many accounts, or keep too high of a balance on any one account. You also don’t want to have too many inquires attempting to get credit, because that can also lower your credit score. If you are not sure if you’ll be able to get traditional credit, you may want to get a secured credit card before you apply to too many places. If you keep your card active by running up a small balance each month and paying it off on time, you can help rebuild your credit.
If you establish a secured card, make sure it is a card that reports the credit limit you have to the credit bureaus, but doesn’t report that its a secured card. Having a reported secured card doesn’t necessarily improve your credit. Once you’ve established regular payments, you can start applying for 1-2 additional lines of credit, such as a gas or department store card. Continue to moderately use these cards, and this activity will reflect positively on your credit report.
By making credit improvement a priority, with focused time and effort, your credit will start to improve. In fact, you should expect to see results within 12-18 months of repairing your bad credit. And, by keeping good credit habits, it will be easier to continue your good credit, with less effort than it took to repair your credit to begin with.
