how to rebuild bad credit

How do you rebuild bad credit?

With Christmas on the horizon, there is much “talk” of the tendency of many people to go into debt for the holiday. Obviously, overspending is a serious concern, especially as it can lead to bad credit. But what if you already have bad credit? How do you rebuild a bad credit score? Is there such a thing?

With Christmas on the horizon, there is much “talk” of the tendency of many people to go into debt for the holiday. Obviously, overspending is a serious concern, especially as it can lead to bad credit. But what if you already have bad credit? How do you rebuild bad credit? 

Although it may be an awkward topic, bad credit can happen to the best of us. There is no need for embarrassment or recriminations. It is best to be open about the situation in order to address the related subject of how to rebuild bad credit.

Can you rebuild bad credit?

Yes, you can!  As the New Year also approaches, it is both a great practical and symbolic time to tackle financial problems and concerns. Assuage your worries and start 2020 with the resolve to clean your repair your credit with the following tips.

Rebuild bad credit – Start with the credit score

The first step is the most basic – check your credit score

If you are operating under assumptions or that queasy feeling that your credit is bad, the only way for clarification is actually to check the score. There are many organizations that offer this service. If you are wary of doing this online, then research. Company reviews will quickly help you establish whether a company can help or not.

Once you know your credit score, then order a credit report. The two may seem identical, but they are different. The credit score is the final number that dictates your eligibility for loans and credit cards.

The credit report provides the details – accounts, and amounts. It gives you an opportunity to track your yearly activity, and you are entitled to one credit report every twelve months from the major credit reporting bureaus.

It is essential to check the report for any errors since the errors can completely derail your score. If there are mistakes and they are removed, then you will gain needed credit points. The report is also useful for ascertaining if you are a victim of fraud or identity theft.

Do you need more help?

After the completion of these tasks, and your credit does, in fact, need repair, then you will have to start the process of rebuilding. Although progress may be achieved relatively quickly, please be patient and be kind to yourself.

These methods are relatively simple yet effective. Pay all incoming bills on time. It is not just the credit card bill that carries leverage. Utilities, mobile phones, loans, and rent or mortgage all impact your overall credit. Plus, it is a good habit to develop. By paying the bills as they arrive or before the due date, you establish a pattern of financial behavior that will serve you well in the future.

Look for bills to pay

A related issue is to pay any outstanding bills. It might not be fun to track down old bills, but you need to do it! If you cannot afford to pay off the bill in full, then even paying a minimum amount each month demonstrates that you are working to free yourself of the debt. By acknowledging the debt and engaging with the person and/or company to whom the money is owed, you display financial responsibility.

If you have retained your credit card (or cards), then credit utilization is another area of consideration. This refers to the percentage of the credit limit that you use, and the lower the better. Most financial experts suggest that 30% of the credit limit is the ideal figure. As the credit card balance decreases, so do the credit percentage. This will be reported to credit bureaus, and an increased credit score is the result.

pay your bills

Do you need more help?

After the completion of these tasks, and your credit does, in fact, need repair, then you will have to start the process of rebuilding. Although progress may be achieved relatively quickly, please be patient and be kind to yourself.

These methods are relatively simple yet effective. Pay all incoming bills on time. It is not just the credit card bill that carries leverage. Utilities, mobile phones, loans, and rent or mortgage all impact your overall credit. Plus, it is a good habit to develop. By paying the bills as they arrive or before the due date, you establish a pattern of financial behavior that will serve you well in the future.

tackle credit card debt

Tackle your credit cards

In the realm of credit cards, there are actually a few practical ideas to implement. One is to apply for a secured credit card. Unlike other credit cards, this requires an upfront deposit which is the credit limit. In this manner, you are spending only what you can afford, and the payment has already been made.

Becoming an authorized user on another’s credit card is an alternative way to build credit. It does not require any activity on your part. Simply by having your name on an account, (hopefully the account of a frugal and responsible friend), you can improve your credit standing.

If your friend seems initially hesitant, please note that they only have to add you. They do not have to provide the credit card information to you. Another potential solution is for the primary cardholder to set your spending limits, which you certainly do not have to use.

If neither of these above suggestions appeals to you, then there is the option of getting a co-signer. This can be a tricky scenario since you are asking the co-signer to trust you and to share their credit information. Before resorting to this option, make sure that you can repay any charges on the card.

A loan might be the answer

Although it may seem counterintuitive, procuring a credit-builder or secure loan will help. As the name suggests, the purpose of this type of loan is to build credit. Most likely secured through a local credit union or bank, you will have to show proof of income and/or you may have to borrow against an account. With these types of loans, it is essential to pay on time.

As you incorporate these practices into your financial life, creating a monthly budget and saving money for emergencies are additional ideas. The budget will keep you on track, especially with bills, and the emergency fund will help with any unexpected developments.

Therefore, in this holiday season, don’t lose hope about your credit. A new year will bring new financial habits that will help you achieve the greatest gift of all: excellent credit.

Get back on track with credit repair

If you are still unsure as to what is on your credit file, it may be best to speak to a trusted credit repair specialist. They will conduct a comprehensive credit assessment to determine what is on your credit file. They can help to remove black marks, defaults or credit inquiries. Learn how credit repair works by watching the video. 

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