If you have bad credit, fixing it should be a high priority. Your credit rating is used by landlords to determine whether you're a tenant they want, by creditors when deciding whether to extend a loan to you and even by employers who can withhold a job offer if your credit is bad. There are several steps you can take to rebuild your credit, including some great ways that you may want to explore.
New Credit Cards
If credit cards got you into trouble in the past, they can do so again. They also can be a great and quick way for you to reestablish credit and improve your credit score. Major card providers such as Visa, MasterCard, Discover and American Express may not want your business without charging steep fees and high interest rates, but some retail stores may be willing to extend credit to you. Issuers of store credit cards are more lenient, but if you can get such a card, use it sparingly and pay off your balance, your credit will improve, according to Bankrate.com.
Get in the Habit
One of the things that may have gotten you into credit trouble in the past, bad habits, can be corrected if you practice good habits. These bad habits might have included charging things you clearly could not afford, making minimum monthly payments, falling behind on payments, incurring late charges and fees, and defaulting on a loan. Buy what you really need, pay off your credit card on time and pay off your balances. These steps will help establish a proven track record of good credit practices, another way for you to rebuild your credit.
Review Your Credit
You should review your credit reports at least once annually. The three credit reporting bureaus are Equifax, Experian and Trans Union; they are required by federal law to supply one free copy of your credit report to you annually through a website set up for that purpose at AnnualCreditReport.com. Review your reports for accuracy. If inaccurate information is found on any report, your credit score could be low as a result. You may need to write to the company, explain the error and supply copies of supporting documentation. By law, the credit bureaus must investigate your claim and must, usually within 30 days, correct the mistake or automatically remove that information. You are entitled to obtain a copy of their findings and to receive a free copy of your updated credit report. Your credit scores are also available, but for a nominal fee.
Get More Credit
Once you establish a solid track record of rebuilding your credit, and your credit scores begin to improve, then you can begin to borrow for other purposes, including obtaining an installment loan for a new car. Those rates may be sky high, but you may be able to refinance for a lower rate later on. Liz Pulliam Weston, writing for MSN Money, advises loan shoppers to put down a large amount of money and to avoid loans with a big prepayment penalty.
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