Bad credit is stressful and it’s expensive. A lot of people focus on credit repair and removing negative information from their credit reports because they want the best way possible in building credit fast.

What they tend to forget about is the need to start building new lines of credit. Lines of credit that will show creditors that you can now easily manage your credit and finances.

There are different ways to increase your credit score. Rebuilding bad credit can be a daunting task when you aren’t sure where and how to begin.

Though some people can do this on their own, certain people hire firms and acquire services to assist them in improving their credit scores and creating new, healthy trade lines.

Basically, building and maintaining good credit are the first crucial steps toward low-interest rates and higher credit limits. It can also be an essential first step to obtaining an excellent, high-paying job. Read this article to know what you can do to build credit fast when you have bad credit.

Methods of building credit when you have bad credit:

Here are some methods and tips you can do in your process of building credit!

1. Check what’s affecting your credit score

The first step is to check your credit report to see what the cause of your bad credit is or what’s affecting your credit score. There can be a lot of factors affecting your score, but the most common and the factors that you should focus on are:

• Payment history – a record that contains the timely payments you make along with missed or late payments.
• Credit Utilization’s Ratio – compares the total amount of credit you have available with how much you’re currently using.
• Total Debt – the total amount of debt you have, which includes credit card accounts, loans, collections, and any other credit accounts.
• Mix – the kinds of accounts you’re using
• Age – how old are your credit accounts are
• Hard inquiries – recent credit applications you have submitted
• Public Records – like bankruptcies and civil judgments

2. Apply for new lines of credit

Now that you know how your score is calculated. You need to start adding a few new lines of credit to your credit reports. The most common types of accounts to build are:

• Secured credit cards – Secured credit cards are guaranteed approval. They are a great way of adding a revolving line of credit to your credit report.
• Unsecured bad credit credit cards – these are very popular since they don’t require a security deposit. But they do have an application fee that they will automatically apply to your credit card once you are approved. You will need to pay off this fee in order to access your full credit limit.
• Credit builder loans – these are a great way of putting an installment loan on your credit report. The issuer will report an installment loan on your credit report for a set amount of time. At that time the loan “matures” and they will release the funds to you. This helps you build credit and a savings account! We recommend Credit Strong.

3. Clean up errors

If you discover any errors within your credit report, you can have those errors fixed by writing a letter to the credit bureau that issued your report. You can send a dispute letter with the statement that there are errors and inaccuracies in your report and explain what you want to be done (update or delete). If you need help with that, check out our Do It Yourself Credit Repair Video Series & Software

4. Pay your bills on time

• Make sure to pay your bills on time each month or even before they are due
• You can consider setting an automatic payment or payments reminder to make sure you won’t be late for your bills payment

5. Think about your credit utilization ratio

Your credit utilization ratio is the difference between how much credit you have and how much you’re using based on credit card limits. The goal is to get it down to 30%. If you can aim for 10%, the lower the better! You can reduce your credit utilization by:

• Paying down or off your debts
• Keeping your credit card balances low or even zero
• Be careful closing accounts, when you close an account the amount of your available credit will decrease, which in turn increases your credit utilization ratio

6. Ask for help from family or friends

If they are willing, you can ask a friend or a family member to help you build your credit, and they can help you in several ways, including:

• They can allow you to become an authorized user of their credit account
• They can open a joint account with you,
• And they can become a co-signer for a loan or credit card

7. Be careful with new credit

Opening credit accounts or just applying for them can affect your credit score. Each credit application you make will be reported as a hard inquiry on your credit report, and too many hard inquiries within a short time could negatively affect your credit

When possible, apply for credit from lenders that use a soft inquiry. A soft inquiry will not affect your credit score

8. Get help with debt

Once you’re having a hard time paying your debt you have options for help including:

• Credit counseling – A licensed credit counselor can help you create a financial plan to better manage your debt. The Federal Trade Commission states that the majority of reputable credit counseling firms are non-profit.
• Debt management plan – A DMP focuses on getting rid of your debt. You’re going to deposit money every month with a credit counselor, who will then use those funds to pay your unsecured bills following a payment schedule that the counselor works out with you and your creditors.
• Debt consolidation- if you’re with an alt of unsecured debt with high interest, such as multiple credit card balances, a debt consolidation loan could help you reduce the amount of the interest you pay every month. Doing this can trim the total amount you pay every month by just paying one bill instead of multiple ones and can even pay down your debt faster.

9. Seek professional credit repair help with caution

If you have been trying to fix your credit on your own and you notice that you’re not getting anywhere, you may need to consider seeking out professional help, but be careful choosing a credit repair company. Moreover, be certain that the one you select is licensed.

Because there are a lot of people on the internet claiming to be credit repair specialists, all they do is send a lot of disputes, hoping that negative items on your credit will come off. And sometimes they do. But did you know that credit reporting agencies can flag your account for frivolous disputes if you send a lot of disputes?

And because of that, you’ll have a hard time getting them to pay attention to any further letters from you.

If you have not taken a look at our DIY credit repair kit, you should! Because we give you all the tools you need to fix your credit on your own.

Conclusion

In conclusion, you have a lot of options and power to build and rebuild your credit. Just learn more about how to build credit, and invest in credit monitoring services so you can check all 3 of your credit reports and monitor your progress and take the necessary steps to build your credit.