It’s one of the more annoying catch 22s of the modern age: in order to fix bad credit, one must faithfully pay back lines of credit that are nearly impossible to attain with bad credit. The ability to own a credit card and get a car loan before we’ve reached our true peak of adult maturity means many of us spend our thirties and even our forties paying the price for ruining our credit score in our twenties. It’s a problem derived from ignorance not from maliciousness. Most folks eventually realize they need to financially evolve and become financially responsible.
Unfortunately, that doesn’t wipe the slate clean, and even several years of paying off debt and acquiring substantial savings isn’t enough to be forgiven. You must demonstrate you’ve learned your lesson through new lines of credit, the ones you can’t get. But if you’re truly financially responsible, there are three simple things you can do to help improve your credit score and finally have it live up to your newfound financial responsibility.
1. Settle All Debt
You might be paying off those credit cards and student loans diligently but what about that $145.00 phone bill you childishly disputed seven years ago they eventually stopped calling about? If the three major credit report agencies were notified then it didn’t just go away. Try and remember any and all straggling debts you may have accumulated over the years and track them down to pay them off. It won’t fix your credit rating over night but it not only reduces the damage these lingering debts might incur upon your credit but it brings peace of mind knowing you’ve only got to worry about what’s in front of you.
2. Control, Don’t Prohibit, Credit Card Use
Our first instinct when recovering from overuse of credit cards is that it’s liken to a drug addiction or being an alcoholic: once we get over it we never want to touch the stuff again. That’s a wise financial choice but it doesn’t help your credit rating at all. Creditors want to see you’ve not simply paid off debt but that you’re now a trustworthy borrower who is proven to pay back debts immediately and without a fuss. If you’ve got bad credit the APR will be high, but taking out a credit card and using it a few times a month is a great way to stay relevant and responsible in the eyes of creditors and get that score looking better.
3. Take Out High Risk Loans
The only loans you might have access to with your existing financial history are bad credit loans. These come with excessively high interest rates attached, which make them pretty unappealing to people in your situation, but don’t count them out. Taking out these loans and paying them back quickly – by way of having a preplanned way to pay them back immediately – is a great way to build some positive credit history. You don’t need to spend the money, just take it out, move it around, and pay it off before that high interest kicks in.
They sure don’t make it easy to reclaim good financial standing or even get there in the first place. But that’s life, and if anything it makes finally achieving good credit standing all the more an accomplishment. Don’t think you’re doomed to suffer with the seemingly permanent stain of a poor credit rating. You have the power to do something about it.