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Bad Credit Start Rebuilding Quickly With These Tips

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If you asked ten people with bad credit how they ended up in their situation, you’d likely get ten different responses. You’d hear about how an ex took everything in a divorce and left them struggling to make ends meet. You would hear about unexpected layoffs that meant payments took a backseat to buying groceries. And someone would tell you how their lack of financial responsibility got them in over their head.

One thing all ten people will tell you is this: they never WANTED to have bad credit.

It’s a situation that no one desires. It feels like a burden; a heavy weight hanging around your neck. And I should know. I’ve been there.

Fresh out of high school, I get a cell phone contract and a credit card. Those are the easiest ways to begin building your credit rating…if handled responsibly. I’d make the minimum payments at first. Late payments, then missed payments became the norm as I was lackadaisical with bills.

I was in arrears with both, and in debt beyond my means. I drove a clunker of a car, and I couldn’t see the way out of my predicament. Finally, I cancelled my credit card and reduced my cell phone contract to its minimum, and started paying down my debt. It was months of ramen noodles and hotdogs while paying meager rent to a friend. But I paid it off.

Debt-free, I still had a credit problem. Namely, no one would give me any. I had damaged my rating and needed to rebuild so I could gain some financial security once again. And in my tough spot, here are some tips I discovered to begin rebuilding credit quickly.

  1. Get a secured credit card. Visa and Mastercard both have plans that require a prepayment. It’s not convenient, but it looks good to have a credit card on your credit bureau. Most importantly, make your payments on time, every time.
  2. Get a small loan, and pay it off. Obtain a loan from your bank for a relatively small amount. It will probably be at a high interest rate, and you’ll likely need to provide collateral to get it. A loans officer can help you here — tell them your purpose. You might even want to give a cash collateral as security for the whole loan amount. Again, pay it off on time, and avoid high interest charges by paying it off fast!
  3. Don’t carry balances on your cards. Pay off your credit cards monthly. Once you begin to pay the high interest amounts on your credit card, it can begin a cycle that gets you in the same hot water.
  4. Create a budget and stick to it. Know exactly how much your expenses are per month, precisely what your income is, and how much money is left over. Set some aside in a savings account every month for the unexpected bills life sends your way.
  5. Rely on your friends and family. Bad credit can happen to anybody. While you might be embarrassed, your close friends and family will understand. They can help you make good financial decisions, and knowing your situation can mean they won’t put you in a position where you’ll be wasteful with your money.

Like me, you can successfully rebuild your credit. After just a couple years of diligence, my bad credit rating was a memory, and an explainable mark on my credit report.