Start Off Using a Secured Credit Card
A lot of people will tell you to run the other way should you ever get offered this type of card. From personal experience, I can say if it weren’t for being offered a secured credit card, I never would have been able to start working on my credit. What exactly is a secured credit card? It’s a card that you will have to put money towards to use. Think of it as collateral but it’s worth it to start the journey to fixing your credit. Now keep in mind the card may not have a high credit limit. When I started out, mine only had a limit of $250. You have to start somewhere though, right?
ALWAYS Pay On Time
This is crucial. Don’t allow yourself to have a credit card if you cannot pay on it in time. Late payments can add up and late payments also hurt your credit/credit score. Even if it’s the minimum you are good. However, I’d recommend paying a little bit over minimum or pay off all of it. Not paying on time can result in your account being sent to collections and NO ONE wants that. So pay on time!
Don’t Use All Available Credit
The more credit you use, the lower your credit usage score will be. Credit card and loan companies can see how much you use and this could impact future applications for either. Learn to be responsible and try not to use more than 35% of the available amount on each card.
Consider A Loan Instead
Instead of using credit cards, consider applying for bad credit loans. This can be a plus because it will be for an amount you can actually afford and lenders can report your repayments to the credit bureaus. Paying on time will help you qualify for better rates the next time you need a loan.
Set Up Reminders or Autopay
I personally do not have any of my accounts set up for autopay but I know it could be beneficial to those who tend to forget to pay bills on time. I feel more comfortable paying the bills myself that way I know where the money is going and I don’t accidentally overdraft my bank account. So in this case, do what you feel is comfortable. No pressure.
Check Your Credit Score Monthly
I know of a few good sites where you can check your credit score for free and it won’t impact your score: CreditKarma and CreditSesame. I swear by them. There is also another option but you must have a Capital One account to access it. I also know with the two websites I mentioned they have other offers of credit cards and loans. Just be wary of what you apply for.
With getting your first credit card comes tons and tons of credit card and loan offers in the mail. DO NOT apply for every single one. Put those babies in the shredder and focus on the ones that you can actually afford and that will benefit you in the now and even in the long run.
I hope these tips help you out in how to work on your bad credit. Thanks for reading!