If bad credit has rendered you without any usable credit cards, the first step to rebuilding credit will be acquiring at least one new credit card. Using this credit card the proper and smart way will help you begin to establish a new positive payment history, which in turn will help turn your credit score in an upward direction.
Establish New Lines of Credit
What type of card will you be able to get? Here are some of the options available:
- Department Store or Gas Credit Cards
- Secured Credit Cards
- Credit Cards from your Bank
- Credit Cards for People with Bad Credit Scores
There are some things to avoid during this process like putting in too many credit applications, as running your credit over and over will lower your score. Credit cards that are offered to people with bad credit may have have high interest rates, high fees and a high membership fee. Some items to avoid are prepaid credit cards and payday loans as they do not report to the credit bureaus, which do not help your credit score.
Another way to establish credit would be an installment loan, which can be done by purchasing furniture, electronics, or a car.
Change the Way You Spend
To improve your credit score will mean that you will need to start changing the previous way you spend money and pay your bills. Paying late, or only the minimum payment and missing payments will adversely affect your credit score.
Wisely using the new credit you have attained will be key in rebuilding your credit scores. Only charging what you can afford is a good rule to live by in rebuilding credit. Having better spending habits will put you on the right path to a better credit score.
Late payments or delinquencies can affect your credit score in a negative manner. Payments that are 30 to 60 days late can affect you for months, while a payment ninety or more days late can affect you for years. Besides the negative affect to your credits scores, your lender will charge you a late fee which makes your payment even higher. Make sure to pay your bills on time and with the minimum of amount owed.
Following these three smart tips will help put you back on the right path towards a good credit score.