How to Repair Bad Credit

All it takes is a few negative reports to affect your credit score in a very negative way. Your highest propriety should be repairing negative credit. You may still be able to borrow or obtain a credit card. However, with a bad credit rating, you will end up paying a much higher rate of interest than if your credit score was much higher.

In order to qualify for a loan when purchasing a home, most lenders will not extend you credit if you have had any negative credit reports in the last two years. What that means is no late payments, no judgments and no liens.

If your credit has recently gone south, you may be able to qualify for a mortgage from a “subprime” or “sub-A” lender. You will pay a higher rate of interest, and you may be required to provide a larger down payment. However, it is possible for those with less than perfect credit to obtain a mortgage. By paying your mortgage on time, you will eventually build up your credit.

Joint Credit Accounts

Another way to build up your credit is to “borrow” the ratings of someone who has an excellent credit ratings status. If you have a close friend or family member with outstanding credit, they can add you to their credit card account as an authorized user. These individuals must trust you enough and have their own credit card. When you receive the card, you can simply return it to the person who lent it to you. When a lender performs a credit check on you, their reports will show that you have an open line of credit, as well as the good credit information of the primary user. There will also be a footnote showing you are authorized to use the card.

Car Loans

If you have poor credit, you will often experience some leeway when you apply for a car loan. However, bear in mind that the terms of the loan won’t be as attractive as if you had a high credit score. If you are late making only a few payments, the interest rate will also rise. If your credit was bad from the beginning, the interest rate of the loan will be high.

Additional Ways to Repair Your Credit

You can often find businesses that are willing to extend credit to you. College students may be able to obtain a credit card with a fixed low limit even if they little or no credit. Many college credit unions are more than willing to offer their cards and services to students. You can also obtain a store credit card from many department store chains, electronics stores or home improvement stores. Shopping at their stores and paying your bills on time will impact your credit score in a positive manner.

The best way to proceed with any credit card is to ensure that you don’t charge more than you can afford and you pay your bill on time. The temptation to charge purchases you can’t afford is great. However, keep in mind that you will eventually have to pay for your purchases with interest.