In America, having a bad credit score can pose major challenges. Landlords, employers, and banks all use credit scores as a way of establishing trust with potential tenants, employees, and borrowers. Without a good credit score, it can be difficult and expensive to make significant life purchases, such as a house or car. In fact, most of the time, lenders will issue extra fees or higher interest rates to borrowers with bad credit scores as a way to account for lack of trust.
If you have a bad credit score, it can be overwhelming to approach rebuilding your credit. However, with time and smart strategies, you can rebuild trust with lenders despite past slip-ups. The good news is that if your credit score is really low, you can make significant improvements relatively quickly. If you are struggling with paying off your debts, it may be helpful to consult a skilled debt settlement lawyer. Outlined below are some effective strategies for rebuilding your credit.
1. Make Sure Your Credit Report is Error-Free
One in five Americans has an error on their credit report. Incorrect balances, creditors failing to close out old accounts, and even identity theft can all appear on your credit report. If you have one of these errors on your credit report, it could be reducing your credit score by up to hundreds of points. You can review your credit reports through annualcreditreport.com. Once you have those credit reports, review for errors. If you find errors you will need to dispute the errors with the credit bureau to have them corrected. Once the errors are corrected, your credit score will improve.
2. Try to Pay All Your Bills on Time
One of the biggest factors of your credit score is your payment history. If you have a history of paying your bills late, you should prioritize paying your bills on time—even if it’s only the minimum payment. When you start to rebuild your credit, you cannot afford for lenders to see that you are missing payments or that some of your bills are going to collections. If it is not possible for you to make the minimum payment, you should contact your creditor to make another arrangement.
3. Get a Secured Credit Card or a Secured Loan
Sometimes, a bad credit history will cause your bank to close your credit account. If this is the case, you will probably have to get a secured credit card, which requires an upfront deposit. The amount that you put down on a deposit for a secured credit card will be your credit limit. When selecting a secured card, it is important to choose a bank that reports all payments to the credit card bureaus.
Another option for building credit is to get a secured loan, which is designed for people with bad credit as a way to restore their credit history. Most of the time, secured loans are only available through credit unions or small, independent banks. To get a credit-building loan through one of these entities, you’ll have to become a member and provide proof of income.
4. Get a Co-signer for Your Loan or Credit Card
If you’ve tried to rebuild your credit, but are constantly getting turned away, you might want to consider asking a close family member or friend to co-sign a loan or credit card. This should be used as a last resort, as failure to make payments on a co-signed loan or credit card could damage your co-signer’s credit history.
Consult With a Skilled Debt Settlement Lawyer
If you are struggling with credit card debt, you are not alone. In America, the average person has three credit cards and 55 percent of credit card holders have debt. At McCarthy Law, we are dedicated to helping our clients navigate their financial circumstances and reach a favorable debt settlement. We understand the overwhelming burden that debt can have on people’s lives and are committed to helping clients end the cycle of credit card debt. To schedule a consultation with one of our skilled debt settlement paralegals, call our office at (855) 976-5777 or fill out our online contact form.