Bad Credit? Best way to build it.

Credit is the golden key for some, and a cursing for others. Whether we like it or not, credit follows us wherever we go and it plays a critical role in our adult lives. For those of us with bad credit, there is hope, all is not lost. With that being said it will take work to get your credit score to a desirable number.

300-579 is considered poor

580-669 is considered fair

670-739 is considered good

740-799 is considered very good

800-850 is exceptional

These may just look like numbers, but we all know they are much more than that. Having a good credit score could be the deciding factor for lenders to give you a loan on a house, car, or anything for that matter. Unless you are from the Stone Age, you know loans are often a necessity in life. If you have a good credit score congratulations, now go get a loan on that new Tesla you’ve been eyeing. If your credit is bad, listen up.

  1. Open credit card account – This can be a credit card with a 100 dollar limit for all it matters. Any line of credit builds your financial reputation thus building the trust of future lenders. Just make sure to pay your cards balances when they are due, timing in critical to your credit score.
  2. Open secured credit card account-Secured credit cards are often tied to bank accounts. These credit cards offer security to the bank/lender as your funds protect them from loosing currency. These forms of credit cards still build your credit if used properly.
  3. Take out small loans – Take any loan your bank/credit union can lend you. Pay this loan back as agreed and your credit will rise.
  4. Ask to increase credit limit on existing card – Asking for an increase on a current credit card will improve your reputation with lenders as they will realize you are responsible enough to handle larger loans. This will build your credit score.
  5. Get a store credit card – Store credit cards may not be the best financial move, as you do pay an interest rate, but they will build your credit if you need to improve your score. Any form of credit builds your reputation.
  6. Get a co-signer – This may be an option for people with no/poor credit, but having a co-signer does improve your credit(perhaps not as fast as being a sole lender). This is a great way to establish a line of credit and build a score.
  7. Pay off existing debt – Pay off debt from old credit cards or loans. This does not have to be done in one lump sum, but paying off debts will allow yourself to grow your credit score. Debt collectors and unpaid balances can really impact your credit in a negative manner.

Follow these steps and keep working. Do whatever you have to in order to improve your credit. Manage your money in a fashion that allows for debts and credits to be paid off responsibly. Your future depends on it.

Photo Credit: Experian

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