How to Rebuild Your Credit

Good credit is invaluable today. When your credit score has taken a hit, it can seem impossible to ever repair it to a decent level. Starting to rebuild your credit is often the hardest part. Once you’ve started the process, however, momentum begins to develop and you can begin to rebuild your credit over time.

Get New Credit

It might seem contradictory when your credit is struggling to recommend getting even more credit. However, if your bad credit woes have left you without any credit cards, you need to get a few to rebuild your credit.

If your credit score took a nosedive, most major credit institutions won’t give you a credit card right away. Luckily there are a few places where you can get credit cards a bit easier to rebuild your credit score.

Consider applying for credit cards from these places:

• Gas station
• Local bank
• Department stores
• Secured credit card institutions

It’s important to note to only select a couple of places to apply for a credit card. The more applications you put other there, the lower your credit score will get. This will make it hard to get a credit card and will start a negative spiral as you try to rebuild your credit. Also, avoid any credit card companies who prey on people trying to rebuild their credit. They will charge a high interest rate and high fees for their cards.

Establish New Credit Habits

It is critically important when you try to rebuild your credit that you establish new practices. If not, you will be right back where you started but possibly with nearly irreparable credit.

When trying to rebuild your credit, you must avoid:

• Paying credit card bills late
• Not paying credit card bills at all
• Having your account sent to collections
• Defaulting on a loan
• Filing for bankruptcy
• Getting a judgment against you
• Foreclosure on your home
• Having a high balance or maxed out credit cards

Part of establishing new, beneficial credit habits should include paying your bills on time and paying well above the minimum balance. The minimum amount owed to a credit card company is not set based on how to get you out of debt. Instead, it is there to try to get you to pay off the loan over a long period of time. After all, credit card companies make their money by the interest you pay them each month you carry a balance.
Make a plan to avoid many of the pitfalls that allowed your credit to get in disrepair and avoid making the same mistakes again.

Replace Bad Credit with Good Credit

The only way to ultimately repair your credit is to show creditors over a long period of time you will be responsible with their money. There is no quick way to do this. It’s a trust that must be built over time and can’t be rushed.

Make sure you follow good credit habits. Charge only what you can afford and pay your bills on time each and every month. Also, only have a small number of credit cards you know you can easily handle. This will, over time, replace bad credit with good credit.

While it might seem impossible to rebuild a bad credit score, it can be done over time. With persistence and good credit habits getting established, you can repair bad credit. In the end, it takes time, patience, and a willingness to do things differently than before.