Bad credit can happen to good people; don’t despair if it has happened to you. There are ways you can get your creditworthiness in shape over time and improve your credit score. But you have get started today—and keep working hard to show potential lenders you’re serious about getting your ability to take on credit in order.
As you work toward your goal, your creditworthiness should improve, resulting in better credit offers being sent your way that can help you save money.
Because accurate and timely credit information generally cannot be removed from your credit report, there are no quick fixes to improve your creditworthiness. However, by improving your creditworthy behavior going forward and over time, you may be able reestablish your creditworthiness and your credit capacity.
Get started on increasing your creditworthiness
Open new accounts and pay them off. Being able to repay a variety of new accounts is a key step in rebuilding your creditworthiness. This means that devising a strategy to open and pay off as many different kinds of accounts as you can is better than adding more debt to an existing credit card.
Start small. Reestablishing your creditworthiness can be similar to starting over from scratch. Starting small, with credit cards from department stores or your local credit union, can be useful in this case.
Consider asking for help. If you can’t qualify for credit on your own, ask a friend or family member to cosign for a small loan or credit card. If you can stay current on a major credit card account or small auto loan, it will speed up the process of reestablishing good credit and improving your credit score on your own.
Consider a secured credit card. Secured cards are guaranteed by a deposit you make with the credit grantor and offer the purchasing power of a major credit card. Just make sure the grantor reports payment histories to the three major credit-reporting companies so that by using your card, you are building a positive payment history.
Use your new accounts in moderation. In addition, make payments that are more than the minimum. You can keep a small balance on your new accounts so that your positive payment history will continue to show up on your credit report.
Keep your balances low. Avoid carrying a balance of more than 30 percent of your credit limit. Lenders may view this as excessive debt with which you may not be able to stay current.
Reduce your household spending. Review your household expenses and determine which ones you could do without. Consider creating a budget to track exactly where your money goes each month.
Call lenders if you can’t pay some of your debts. Explain your situation. Some lenders will be willing to work out a plan for you to pay back what you owe.
Contact a reputable credit counseling agency to make a plan for paying off your credit bills. Beware of agencies that offer “quick fix” ways to get out of debt. Talk to counselors at a consumer credit counseling agency.
Check your progress
By reading this article, you have taken the first step toward reestablishing your credit. Now it’s time to take the next steps. Do you know exactly where your credit payment history stands? Find out by purchasing your Equifax Credit Report™ so you can monitor your credit file.
It takes some time for your new creditworthiness to gain momentum. You are demonstrating that you are not depending on certain credit cards and loans for your financial survival. That’s why opening and paying down accounts may make it a little easier to get more credit.
With patience and timely repayments, you’ll likely be able to reestablish your creditworthiness so that lenders will look on you favorably when making decisions about your ability to handle even more credit.
The information contained in this blog post is designed to generally educate and inform visitors to the Equifax Finance Blog. The blog posts do not give, and should not be assumed to provide, personalized tax, investment, real estate, legal, retirement, credit, personal financial, or other professional advice. Before making any financial decision, you should always consult with the appropriate professionals who can explain your options, rights, and legal responsibilities, and advise you on any tax, legal, credit, or business implications that may result from those decisions. The views and opinions expressed by the authors of blog posts are their own views and may not be the views or opinions of Equifax, Inc. and/or its affiliates.