How To Build Back Up Your Credit Score

The problem of improving a bad credit score can seem like a catch-22: to apply for new credit and be approved, you must have a good credit history, but in order to get a good credit history, you must have credit.

What number is considered a good credit score rating? On a scale that usually goes from 300 to 850, the short answer is anything above 720

Credit card companies and banks have tightened the requirements to give out credit, so building up a good credit score is becoming quite a challenge. The lower your credit score, the fewer options you have for getting approved. For a consumer who has no credit at all, or for one that has bad credit, they are much worse off. As tough as it sounds, it doesn’t mean that it’s impossible to build up your credit score.

Secured Credit Cards

If you have tried getting a credit card but were declined, try applying for a secured credit card. With a secured credit card, the consumer makes a deposit, for example $100 – $500, which will be their credit limit for about 18 months. The consumer is actually borrowing money against their own money, so lenders are pretty lenient with the application process. As long as they make payments on time and stay within their balance, the cardholder will eventually promote the consumer to an unsecured credit card with more credit. Keep in mind that secured credit cards are going to have much higher interest rates. There may also be an annual fee charge, which the consumer can ask to be waived.

Installment Loans

No matter how small a loan is, it will show up on your credit report. Every loan will help improve your credit score as long as you make payments on time. Banks are still approving short-term loans that have a set monthly payment. The chances of being approved are even higher with some type of collateral or a co-signer. To get the best rates, shop around at local banks and credit unions.

Authorization on Credit Cards

Asking a family member or very close friend to add you on to their credit account as an authorized user can help build your credit score. Authorized users on an account gain the positive credit history (as well as bad credit history) on the account. The good news is that your low credit score won’t affect the person’s credit at all. You can be blocked from using the card, but you want to be listed as an authorized user to build your score. If there are any credit problems on the card, such as late payments or going over the credit limit, it will hurt your credit score.

Retail Credit Cards

Even though banks and credit card companies are making it tougher to get approved, the retailers have a less strict policy when it comes to being approved for a credit card. Try applying for credit at one of the retail stores to help rebuild your credit score.

It can be very discouraging to rebuild a credit score, but with time and diligence, it can be done. It’s never too late to start rebuilding your credit and get it right where you need it to be.

Byline: George Anderson recommends recently visited to take care of his credit-related problems

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