A Few Tips for Repairing Bad Credit

Getting rid of negative marks on your credit history is a problem facing many hard working people these days. With a poor economy making it difficult to pay bills, it’s no wonder more and more people are looking for solutions to get out of the rut they are in with bad credit. Good credit is not only a nice thing to have backing you up, but it’s also necessary for getting yourself approved for loans and better interest rates. A good credit rating shows lenders that you can handle credit responsibly. Improving your credit score may be difficult at the start, but if you can get yourself moving and start taking steps in the right direction, you’ll soon be gliding your way into those higher credit zones. Here are a few tips that can help get you on your way.

Pay Down Your Current Debts

If you have large balances on your credit cards, you will need to develop a plan of action to reduce the amount you owe. This will go a long way in your effort to elevate your credit score. A good practice is to keep your revolving balance at about 3-7% of your overall credit limit. The more available credit you use, the lower your score will be. Not sure what your credit score is? Here are more details on what I use.

Pay Everything on Time

You should avoid late payments, even the small ones, at all costs. Even small charges like library fines and telephone fees. Even these little fees can make their way into a credit reporting agency or into the hands of a debt collection agent. If they do it can impact your credit report and set you back. This also applies to payments that are not regularly listed on your credit report. If you fall behind on your payments, they could still end up there.

Create New Credit Habits

A lot of bad credit is created by poor spending habits and irresponsible credit card use. If you do not change these habits, then you will never pull yourself out of the low credit zones. Always make sure you stay well below your credit limit and pay your bill on time. If you can pay the full bill, then by all means you should do so. A maxed out credit card is the least ideal situation for your credit score.

Get New Credit

If you find yourself unable to use a reputable credit card because of your bad credit rating, try applying for credit cards with lower application standards. If you use them responsibly you can still establish a positive payment history. Look into department store or gas credit cards. There are even special credit cards for people with bad credit as well as secured credit cards. Be careful to avoid those bad credit cards with high fees and interest rates as well as prepaid credit cards. Try not to submit too many applications, as this can affect your credit score and make it harder to get approved for new credit.

Replace Bad Credit with Good Credit

As you put your good credit habits into motion, you will show creditors that you have the ability to build a solid credit history. Continue to practice good techniques and charge only what you can afford. Use your credit cards as tools for a better credit rating. One or two cards is more than enough to get you started on the right path.

So, you see, it’s not the end of the world is your credit is bad.  You can always take steps toward improving things.  And your credit score is no exception. Just be sure to maintain realistic expectations and understand it won’t happen overnight.

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About the Author: Jon the Saver is a personal finance writer at Free Money Wisdom. His mission is to help you succeed in your personal finance life. When Jon is not writing on personal finance, he spends time with his girlfriend, lifts iron at the gym, and plays Scrabble.

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