9 Quick Tips for Reestablishing Your Credit

creditYour credit score is one of the most influential factors when it comes to your ability to achieve approval for a loan or credit card. In addition, your credit score can impact employment and ability to obtain insurance, as well as your living accommodations.

There are many consequence of having bad credit, and it takes time to reestablish your credit worthiness with creditors. You’re going to have to prove that despite your prior debt issues that you now have the ability to manage your credit in a fiscally responsible approach.With that in mind, here are some quick tips on how you can reestablish your credit:

Create a detailed debt payoff plan. Determine what you will be able to afford in payments towards your debt every month. Also, make sure you pay all of your current debt in-full and on time every month. Lenders will typically view individuals that have resolved their debt issues more favorably than those who disregard them. Your credit will begin to improve as soon as you begin to pay your debt off.

Manage your money wisely! It’s very common for individuals to develop financial issues by overusing their credit. Therefore, to lessen the probability that you will end up in a credit bind, make sure that you always budget and never spend money that you don’t have.

Get a recent copy of your credit report. Make sure that all of your information is being reported accurately and up-to-date. Because any erroneous or outdated information will adversely affect your credit report, it should be removed via a dispute letter to the bureau that is reporting the information.

Apply for a secured credit card. Secured credit cards provide borrowers access to a line of credit — even for those with bad credit. Credit card issuers are keen to extend credit on secured cards since credit lines are guaranteed by the consumer via a cash deposit, which means the card holder can only spend whatever money they have placed in their credit account. Once those funds are depleted, the card holder must deposit more funds if he wants additional credit.

Apply for a department store credit card. This type of unsecured credit card is easier to get approved for than those issued by national creditors like Visa or MasterCard.

Establish additional sources of positive account activity. Open up utility accounts such as gas, water, cell phone, and cable or satellite television service.

Apply for a signature loan. Do you have a savings account at your bank? If so, you may be able to apply for a signature loan that allows you to borrow a small amount of money utilizing the funds from your savings account as collateral.

Stick to cash! After all, buying everything with cash forces you to make hard choices regarding what you can and can not afford since it constrains you to the amount of money that you have in your bank account. And finally …

Apply for a small loan. Believe it or not, there are actually companies out there that offer a wide variety of unsecured personal loans specifically designed to help you get the cash you need while helping improve your credit. They do this by reporting your account activity to the credit bureaus every month. Just remember to pay on time.

Photo Credit: GotCredit


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    remember also to keep your “utilization ratio” strong … which means only use a small percentage of the total credit available to you. Even if you pay your credit card in full each month, you should still only use a small percentage of your limit — ideally less than 20%, but definitely always less than 30%.


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