It is becoming increasingly more difficult to live with bad credit.
Nowadays, credit reports are being used for many more things than just getting loans and bad credit can make your life downright difficult. However, just because you have bad credit it does not mean that you must live with it forever.
There are some steps that you can take to begin to repair your credit and hopefully you will have learned from your past challenges.
Most people do not intentionally set out to get bad credit.
Usually it is the result of unexpected circumstances such as illness or medical bills, divorce or unemployment. These are challenges that could confront any one of us, and very few if any are completely immune to the type of financial meltdowns that can destroy your credit.
If you have bad credit because of any reason, there are some steps that you can take to begin to repair your credit and get yourself back on the right financial track. Before you start doing anything to repair your credit, however, you need to make sure that your income is steady and your life is mostly back in order so that you can maintain the good credit that you create as a result of the credit repair that you undertake.
To overcome bad credit you need to establish some good credit.
Obtain a loan and pay it back within a short period of time, according to the agreement. It is okay to pay the loan back early, however, you will need to pay at least 3 to 6 months of payments in order to make sure that the good credit will show up on your credit report.
The problem is that when you have bad credit it is very difficult to get someone to extend you credit. In that situation, you need to try to get a secured loan. Deposit a certain amount of money into a savings account and then you can use that account as collateral for the new loan. Deposit $1000.00 and then get a line of credit for $1000.00 with the savings account put up as a guarantee that you will pay back the loan.
You can also get a credit card that is secured by using this same principle.
Your savings account guarantees the card issuer that you will pay back the credit line. You can use a secured credit card in the exact same way that you use a regular credit card.
The advantages of secured credit is that most everyone can qualify for it and the secured credit allows you to rebuild your credit so that you are in a better position later to get a regular loan. You may have to pay a slightly higher interest rate at first but it is still one of the best steps for rebuilding and repairing your credit.
Hard times will pass and with the passing of time you can rebuild and repair the damage that has been done to your credit report. When you use good judgment and pay your bills on time you can recover from any financial challenges that you may have experienced.
Image via FLickr by Hakan Dahlstrom
