Making Your Way Out of Bad Credit

Building up your credit once you’ve slipped a few times can be a challenge. However, it’s really not that difficult to do. It just takes a little doing.

If you haven’t caught up on your bills yet, that’s the first step. If you’re unable to make more than the minimum payment, or maybe can’t even make that, you should seriously consider consolidating your bills. Don’t use this as an excuse to start putting more debt on your credit cards. Just consolidate them so that your monthly payment goes down, and then pay as much as you’re able to every month. Every last spare penny you have should be poured into paying back that debt.

Once you’re out of debt, if you can find a credit card, get it. If you can’t, go apply for a secured card. Do NOT use it for anything that you don’t have cash to pay for. Use it to pay your bills every month, to buy groceries, clothes, new shoes, etc. Only the things that you’re planning to buy with cash, or have the cash in the bank to pay for. At the end of the month, pay your bill off completely. Don’t carry a balance on your card at all.

After you’ve gotten your card, only one card, not a dozen, and begun the program of buying your regular monthly items with it, and are successful with that, then it’s time to move on to another challenge.

Find something you’d like to purchase that’s a little larger. Maybe $500 to $1000. Save the money up for it, and put the money into your savings account. Don’t go purchase the item with that money. Leave it sitting there, and talk to your bank about getting a small consumer durable loan. If you own your car outright, you may be able to use it as collateral, assuming they require collateral from you. If you don’t have anything, and they won’t give you a loan without some form of collateral, then perhaps you’ll be able to get someone to sign for the loan for you. Any way you can work it, try your best to get that loan.

Once you’ve gotten the loan, you need to take the money, go purchase the item that you’ve been saving for, and then make the regular monthly payments on the loan. A loan of this size should only have a one year payback time. Just make the regular payments every month, and do not be late.

At the end of that loan period, you will have only one credit card, with an outstanding payment record for over a year, and one loan, also with an outstanding payment record. The loan will also show as being completely paid off at this point, which looks even better on your credit record.

Your credit score will have increased at least 100 points over this time, just by keeping a good payment record. In addition to that, you’ll still have $500 to $1000 extra sitting in your savings account that you wouldn’t have had if you hadn’t used this program.