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Recovering from Bad Credit
Posted By Miranda Marquit On 05/12/2011 @ 12:24 pm In Credit | 2 Comments
In the financial world, one of the most difficult things to overcome is bad credit. Whether you have bad credit because of out of control credit card debt , a foreclosure on your home, or devastating medical bills, it can be tough to overcome the financial stigma that comes with bad credit. While the credit market has loosened up a bit in recent months, it can still be difficult to get a loan if you have poor credit.
On top of the difficulty in getting a loan, your bad credit can have other impacts on your financial life. If you are approved for a loan, you will have to pay a higher rate of interest, increasing the amount you repay over the life of your loan. Additionally, your insurance company is likely to base your premium, in part, on your credit score . A low score can mean higher premium payments. Your ability to rent in certain areas, and even your job prospects, can be harmed by the information in your credit report.
Your poor credit gives you a bad financial reputation. If you want to rehabilitate the way creditors and others see you, it means improving your credit. The good news is that you can overcome bad credit. However, it’s not something that can be fixed overnight. Here are some things you can do to help you overcome bad credit:
If your credit is really bad, you may not be able to qualify for an unsecured credit card . In such cases, it can be beneficial to get a secured credit card. You will have to secure the card with cash in order to be approved, and you may have to deal with high fees.
When you get a secured card, you want to make sure you get it from an issuer who will report your regular payments to the credit bureaus. Also, find out if you can convert the secured card to an unsecured card in six to 12 months, after proving yourself. Make sure that you are getting a true secured credit card, and not a prepaid debit card; most prepaid debit card behavior will not be reported to the credit bureaus and will do you no good.
Fixing bad credit is the work of months. Be wary of those who promise fast results. You might see initially good results, but depending on the tactics used, the long-term results could trash your credit even worse.
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