Life After Bad Credit
How to Make Your Way Back to a Good Credit Standing
Once you’ve done everything you can to remove inaccurate information, you may be left with some negative information that’s legitimate. At this point what you really need to do is work to improve the credit that you have.
There are several things you can do to slowly work to return to a good credit rating. In this chapter you’ll learn how to maneuver your way back into good standing.
A Strategy for Financial Success
You may feel like you’re stuck without any kind of credit. It may be difficult for you to reserve a hotel room or rental car without it. It may also put you further away from your dream of owning a home or a new car.
However, if you have some patience, you can rebuild your credit fairly quickly and get into position for the types of credit you need.
In the early stages of rebuilding, you shouldn’t apply for too much credit. This puts negative marks on your credit.
Initially, start putting money in a savings account. When you have a nest egg of somewhere near $300 - $1000, you’ll be in a better position to apply for a loan. You’ll also have a reserve to use as collateral if neccessary.
Whatever credit accounts you do have, make sure you’re able to manage them. Make your payments on time and do your best to keep the balances low (no more than 35% of the credit limit). Remember that when your credit is maxed out, you lower your credit score.
If you’re unable to get a traditional credit card for emergencies and reservations, you should try to get a secured credit card using your saving account. By making a deposit of collateral, the bank is safe in extending you some credit.
After you’ve continued to make payments on time with your secured credit, you’ll be able to move to an unsecured card. This will continue to increase your credit score.
The most important thing to remember is that it takes time to rebuild credit. It’s much easier to ruin it than it is to build it. Have patience and be diligent and you can come back from your problems.
You can find reviews and offers for secured and unsecured credit cards in the Resources section.
Realize, though, that it can take up to two or three years to get into the position you desire. Having a realistic timeframe ahead of time will keep you from getting frustrated along the way.