Sometimes people make unwise choices or take on more credit than they can handle and end up with a bad credit history. Sometimes they acquire bad credit through divorce, loss of a spouse, or unexpected healthcare costs. If you have poor credit you may still be able to borrow money or qualify for credit cards, but it will come with a higher interest rate, and the terms won’t be as favorable as they are for those with good credit.
There are simple steps you can take to improve your credit score, no matter what shape it’s in. It won’t happen instantly, and it will take some work, but you can do it. In fact, if you take these actions and stick with them, you may be able to bump your score up by 100 points in just a couple of months (maybe even faster).
You can boost your credit score and keep it up by doing these things:
A secured credit card can help you build credit so that you can get credit in the future. A secured credit card works like a regular credit card with a cash safety net. Basically, you supply a cash deposit (the secured part) to cover your credit limit, then use the card and make on-time monthly payments.
Check On Credit Reporting
Since your goal with a secured card is to establish or reestablish good credit, make sure that the company issuing the card reports to a credit bureau. Otherwise, the card can’t help you build or repair your credit history.
If you don’t pay your bills, the card issuer will use the money from your deposit to cover your debt. It may be difficult to come up with the amount to deposit, but you can build a credit history using this method. Many people find that after twelve to eighteen months of making timely payments on a secured card they can “graduate” to a regular credit card.
Don’t Fall for Scams
Don’t fall for advice given by some “credit repair services” or “credit doctors” telling you to obtain an Employer Identification Number (EIN). They’ll suggest you apply for credit using that instead of your Social Security number, so your credit history doesn’t pop up when a credit check is performed. If someone tells you to do that, don’t. This is a felony.
If you have poor credit, you’re more susceptible to questionable credit offers, so stay on your toes. Don’t fall for offers of easy ways to repair your credit. You have the legal right to correct any errors in your credit report by directly contacting the credit reporting bureaus; don’t pay someone to do this for you. Some credit repair companies make false claims about their ability to clean up your credit. Only the creditor or the credit reporting bureau can remove a debt from your record, and the only way to clean up your credit history is by making payments on time for several years and paying off your debts.