Fixing Bad Credit

You’ve had good credit for a while and now it’s in the dumps. What happened? That question really isn’t important. The real question you need to be asking yourself is how do I get my credit score back to the national FICO average which is about 670. The credit card companies don’t make life easy on consumers by offering sky high limits and tons of offers. Despite the national credit crunch it is still very easy to get a credit card these days. How you use the cards will determine your credit rating, along with a few other details.

creditSometimes people underestimate the power of good credit. You might miss a payment, ignore a bill, or even file for bankruptcy. It doesn’t matter how you got bad credit, it matters how you are going to get good credit. Don’t let bad credit make life harder for you. By now you’ve probably figured out you have a spotty credit record. Getting rejected for credit can be humiliating and embarrassing. Now you need to put that behind you and concentrate on building up your credit from the ground up.

Here are my five tips for building credit and raising your FICO score.

    1.  First thing you need to do is ensure you have an active checking AND savings account. If you don’t have a debit card you should then apply for one immediately. Having a debit card will solve your immediate problems such as buying airline tickets or renting a car. True you have to have the money in your account but the MasterCard or Visa logo on the debit card can be a godsend in the future.
    2. Second thing is to get a secured credit card with a Visa or MasterCard logo. You will find that you are getting credit card offers in the mail. Read these carefully because they are designed to take advantage of people with bad credit. You need to get a secured credit card. These cards will offer very little available credit after all the fees have been applied. You need to max out this card and then pay the minimum payment for a while. This establishes a new credit history.
    3. Don’t ever miss a payment again, pure and simple. This is imperative as it takes two years for a missed payment to leave your credit statement. Beg and borrow for the money to make the minimum, don’t miss a payment. Missing a payment after filing bankruptcy essentially will reset your credit rating back to a new low. Don’t let this happen.
    4. Monitor your credit on a monthly basis. TransUnion, Equifax, and Experian all have plans where you can get monthly reports on your credit. You can get one free report a year but trust me you want the monthly reports. When you get these reports you need to go over them with a fine-toothed comb. Anything that does not look correct needs to be disputed. These credit reporting sites have an online dispute form you can file. Remember you are on the ropes now and fighting for your credit life. Every little error counts.

Some credit cards and loan offices will look at any one agency’s report or all three, you can never tell. So go to and get your free credit report to start out
You are entitled to this benefit once a year, after that you have to pay for it. My advice is to print out each report so you have them sitting right in front of you.

Now you are armed with the same report the credit card companies see. So here’s the time-consuming part. You need to break out the fine-toothed comb and dig through these reports. Some simple questions you need to ask yourself are:

      • Is current address correct?
      • Are there any addresses listed on the report that isn’t mine?
      • Are my name and other personal information right?

After the easy steps, you need to go over the cards/loans listed in the accounts section. Questions you should be asking there are:

  • Are there any cards/loans that aren’t mine?
  • Are there any outstanding balances on cards/loans I’m not aware of?
  • How many accounts do I have open?

                patience5. Don’t get discouraged. This last step may seem cheesy but you will still have creditors calling you trying to collect money. It will be difficult knowing you can’t even walk into Target or Sears and get even a $300 line of credit. There is a light at the end of the tunnel but it takes concentrated effort to get there. Staying positive and looking at the big picture is super important.

You should now have an understanding of your credit reports. Here’s where you begin the ascent up the credit score ladder. You must be patient as these changes take a while to reflect on your report. The number one rule from here on out is DO NOT MISS ANY PAYMENTS. Close any accounts that are old and unused. Try to keep your oldest active account in good standing as it shows credit history.

You may need to get a starter card to build up credit. These cards charge fees and seem to be a rip-off. However, if you are in need of repairing your credit these can be a godsend. I suggest getting one with a low limit and charging something you need to it. Then do not pay it off, believe it or not paying the minimum payment monthly will do wonders for your report.

The key to rebuilding your credit is patience, it’s not going to happen overnight. A bad choice can ruin your credit fast and good choices take a while to work their magic on your credit. Remember how you got into this situation and try and take measures to prevent it from happening again. In today’s world, your credit is an important part of your financial life.