Did you know that more than 108 million people in the United States of America have no credit score or a low credit score? Having poor credit is a sure way to set yourself back when you’re trying to purchase a vehicle or buy a house in the future. Banks and lenders will balk if you come to them seeking financing for future investments.
It can feel like a major uphill battle when you start looking for ways to fix your poor credit and get your score back to a healthy number. The good news is that you’ve found the perfect guide that makes it easy to implement credit repair and turn your low credit into premium credit.
Keep reading this article to learn more today!
Table of Contents
1. Pay on Time
The number one thing that you should look into doing if you’re concerned with your poor credit is to start paying all of your bills before they’re due. This idea applies to your credit card statement as well as any other open lines of credit that you’re using. Taking steps to pay the minimum amount owed is still going to help your credit, so do that if it’s all that you can afford at the moment.
A big reason why paying on time is so important is that it’s the single-largest factor in determining your credit score. If you’re looking to fix bad credit then you can’t afford to continue missing payments. Your late payments will stay on your record for up to eight years, so it’s good to avoid a late payment penalty at all costs when you’re rebuilding your credit score.
2. Keep Your Credit Available
Another big key that harms your credit score and will result in low credit is when you’re using most of the credit that you’re allowed. This is often called credit utilization, and it’s almost as important as making payments on time if you’re looking to turn your bad credit into good credit.
It’s a good rule of thumb to use less than 30 percent of your credit allowance on your credit cards when you’re building your credit score. The lower that percentage of utilization is, the better your credit score will look. Look at your cards and pay down the ones that have the highest credit utilization to see quick improvements in your credit score.
Your credit card provider will report a lower credit usage to the credit bureaus not long after. You should see a change for the better with your credit after this happens.
3. Consider a Secured Credit Card
A secured credit card is a great option if you’re looking to rise from the ashes and rebuild your credit from scratch. Many people resort to this option when all of their credit card accounts get closed due to a lack of payments. You’ll need to make a deposit ahead of time if you want to fix your low credit with this type of card.
Many times, the deposit that you put down on these cards is equivalent to your credit limit. After you make your deposit, your card will work like any other type of credit card that you’ve used. Make sure that you stay on top of your payments to ensure that you’re building a good credit score.
4. Get a Secured Loan
Secured loans are also helpful if you’re looking to handle credit repair sooner than later. The main purpose of these loans is to help people that have poor credit improve their scores so that they can start qualifying for financing. It provides a pathway for people with the low credit to fix sit and eventually purchase a car or a home of their own.
The best places to look into getting secured loans are local credit unions and community banks. Odds are that you’ll need to have a membership at the credit union or bank in order to qualify for this type of loan. It’s also important that you can demonstrate proof of income as a means to repay the money that you’re borrowing.
Keep in mind that all payments on your secured loan get reported to the credit bureaus. Do not make late payments with this type of loan as you will do more damage to your credit score.
5. Become an Authorized Credit Card User
Some credit cards provide a path for other people to become authorized users on the card. If you have a friend or family member with a credit card that offers that feature then you can ask them to authorize you as a user. Doing this will allow you to build your credit score from the ground up without needing to take out new cards in your name.
Some cards allow the cardholder to put in a spending limit on the authorized user. This is perfect since it provides a sense of security to the cardholder while also helping you handle credit repair.
6. Find a Co-Signer
Your last option if you’re looking to repair your poor credit score is to find someone that is willing to co-sign with you on a loan. This is the last resort if you’re finding that it’s impossible to get access to more credit as a result of your low credit score. It’s best to find a friend or family member that has a strong credit score to act as your co-signer if you want the loan to get approved.
Keep in mind that this option requires your friend or family member to put their credit score on the line for you. Make sure that you can repay if you go with a co-signer.
Start Fixing Your Poor Credit Today
Today is the perfect day to start taking the first steps toward fixing your poor credit and gaining access to the mortgage, automobile, and personal loans when you need them in the future. Becoming an authorized user of someone’s credit card is a great way to improve your credit score if you can’t get access to credit. You should also make sure that you don’t miss payments and keep your credit utilization below 30 percent.
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Also read: Four Steps for First-time Home Buyer Loan Approval
