Once a person has low credit scores and bad credit, it may seem impossible to rebuild his/her credit; you would think such a person would be doomed to a lifetime of denied credit and high interest rates, but bad credit is not the end of the world and it is possible to have good credit again, even after bankruptcy. Of course a person doesn’t just wake up with bad credit one day, it is something that happens gradually over time because of repeated late payments or lack of payments; in the same way you won’t suddenly get good credit, is something that you will have to work at in a disciplined and consistent manner, but with patience and perseverance, you will succeed.
GET YOUR CREDIT REPORT
The first step to improving your credit is to know what your credit scores are, which areas are ok, and which areas you need to work on; you are entitled to free credit reports each year, so get three reports from three different lending bureaus and compare them to see where the information varies and what you need to work on. If there are errors in the reports or outdated information that is negatively affecting your credit scores, getting these errors corrected and updating the information may improve your credit scores, although it probably won’t be enough to give you good credit.
GET RID OF NEGATIVE CREDIT Data about your past credit history such as late payments, bankruptcies, etc. remain on a person’s record for seven years; there is nothing you can do to speed this up but you can make sure that the negative reports are replaced by positive ones so that when the seven years are up you have a good credit standing. The first step is to clear off any outstanding loans that you currently have; this might not improve your credit score a whole lot but it’s a start.
APPLY FOR NEW CREDIT
You’ll need to prove to credit bureaus that you can handle credit, so try and get a new credit card if you don’t have any to use; banks may be reluctant to give you a new card when you have bad credit so try department store cards, gas cards, or secured cards. Don’t make too many applications for new credit however as this can negatively affect your credit score; avoid cards with higher interest rates or prepaid cards that don’t report to credit bureaus and as such won’t improve your credit.
MANAGE DEBT CAREFULLY
It makes no sense to get new credit if you plan to hand it the way you handled your old credit; in other words you have to make a decided effort to do things differently and live within your means if you hope to get your debts cleared and your credit improved. This means doing without things you can’t afford, faithfully making payments, and paying off cards as quickly as possible rather than making only minimum payments; over time creditors will see that you are now capable of handling credit and your credit scores will improve.
Author bio: David is a free lancer writer and content builder of many finance sites and currently is writing articles on best credit cards.