How to recover from a bad credit score

It is hard to get a mortgage with a bad credit score, and receiving a poor credit car finance is a sure way to spend more money on your vehicle than you should have. In order to get the money which you need for a house or a car, you will need a decent credit score. If your score is bad, then you need to recover from it.

Check your credit

To know how far you need to go, you will first have to know where you are starting from. Your credit score report will tell you where you stand as compared to other consumers. It will also tell you what percentage of consumers are in your range, what the historical rate of default is for people in that range, and how lenders see people who have credit scores in your range.

Get a secured card

There are credit cards to rebuild credit, known as secured cards. These cards allow consumers with very bad credit to get a credit line which will report to their credit report, while protecting the lender. You need to have good credit lines reporting to your credit report in order to raise your score. Without them, your score won't go far. The lender is protected because you will give them a security deposit in exchange for the card. Once you have proved your credit worthiness, they may give you the deposit back and possibly raise your credit limit.

Remove the bad marks

Most people who have poor credit usually also have bad marks on their credit like collection accounts, charge-offs and late payment notations. The more of these you have, the worse your credit will be. Get these marks removed by disputing them with the credit bureaus. Sometimes, a simple dispute will wipe them out, and other times you may have to send several letters to the credit bureaus and the collectors in order to wipe them out. The younger they are, the more stubborn they are likely to be.

Keep an eye on your credit score

As you keep up with your credit cards to rebuild your credit, you should start to see an improvement in your credit score. Check it once a month to make sure that your cards are reporting properly, to see if your score is rising and to make sure that no other 'bad' accounts have popped up.

Apply for other cards

As your credit score rises, you will be able to apply for other cards. These will not require a security deposit and may even have some perks, like rewards. These will not only help to improve your score, but can also help you to manage and even save money through free flights, money back and credits for signing up.