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Rebuilding Your Credit

What are the first steps you need to take to begin restoring your credit? The reality is, it’s not that difficult to raise your score, and you just need to know what to do.

Most people expect there to be some top secret tips they aren’t aware of, but you probably know all the solutions already. Here is the single most effective thing you can do:

#1) Obtain new credit

This is simple but very powerful. In many instances, people who don’t have good credit also do not have a credit card because they lost their privileges of owning one.

Some never reapply for one because they want to use cash to avoid going back into debt. But the reality is that if you ever want to apply for a loan or necessary credit, it’s important to start rebuilding your score.

What if you’ve applied to card companies in the past but have gotten rejected? There are still things you can do.

One option is to get a secured card. Get one at a bank around you, preferably the one you do business with. You have the best chance of getting accepted there. Also, focus on cards designed only for those with poor credit. But don’t apply for too many at once.

If you get too many credit inquiries, financial companies will assume you are taking on more debt and will be less likely to work with you. It can also negatively impact your score. And be cautious.

Just because you get accepted for a card doesn’t mean you should use it. Some of them will do more harm than good. For instance, many have hidden rates, such as costly late fees. This is particularly true of bad credit cards. If you can’t make all your payments, you will soon find yourself up deeply in debt again.

What about prepaid cards?

Don’t use them. They have no impact on your credit score, and this is because you are just paying them off upfront, so there is no chance of default. But remember to pay your bills on time. There’s no point in getting a new card if you are just going to continue making late payments.

What if you can’t make your payments on time?

Then just spend what you have and no more. And you might have more money than you think. Do you really need that new toolset? What about all those magazine subscriptions? Try to cut back and budget where you can prioritize reducing your debts.

How long does it take to rebuild your credit?

It depends on your situation. But you didn’t get a bad credit score overnight, and you aren’t going to wipe it out that fast either. Just make sure your payments are on time every month, and eventually, your small efforts will add up. You will see a big difference by faithfully paying your bills on time.

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