How You Can Rebuild Bad Credit

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While rebuilding a low credit score may be tough, it’s certainly not impossible.

Rebuilding your credit requires paying close attention to both your spending and to the credit monitoring services.  

Let’s take a look at some tips that will help you achieve this:

Say “NO” to MAX

Do not max out your credit card(s).  Maxing out your credit card(s) serves as a sign to the credit bureaus that you’re ill-equipped to keep your finances under control.

More importantly, always endeavor to avoid spending that goes beyond 25% of the remaining credit in your card.  For example, let’s say you have $1,000 of credit.  The most you should use in any given monthly period is $250.   

Say “YES” to NEW

Though it may seem somewhat counterintuitive at first, the extension of a new line of credit (a new credit card) can actually help rebuild bad credit.

The key is to get a secured card.  With a secured credit card, you will need to put down a security deposit in order to get approved. 

(Just make sure that this new credit card issuer reports to the three major credit bureaus.)

Say “NO” to Impulsiveness

Impulse-buying is often the culprit of bad credit.  Make the conscious decision to buy only what you need.  Spending your money wisely is one of the keys to effectively managing your finances.  In order to stay vigilant, always remain cognizant of what your failure to timely pay for an item will do to your credit score.

Say “YES” to Due Dates

Payment due dates are rules, not suggestions.  So take them seriously.  One late payment can undo all of the hard work that you’ve put into rebuilding your credit score.

Set an alarm a few days before your payment due date to remind you of your upcoming payment; and then reset it for the actual day.  You need to give yourself ample time to source funds.

It’s never too late to rebuild bad credit.  You just need to learn how to say “NO” to certain things and “YES” to some others.  Put differently, it’s a never-ending balancing act that requires focus, commitment, and impulse-control.