subject: Improving Your Credit Score—The Two Best Ways to Begin the Process [print this page] Improving Your Credit ScoreThe Two Best Ways to Begin the Process
We all make mistakes including those in our financial world, and many have destroyed their credit score with bankruptcies, excessive late-payments, non-payments, overextended credit limits, etc. This has left many people wondering how improving your credit score can become a reality. Poor credit scores make getting any kind of loan difficult to obtain, or at a much higher interest rate. This can be a very difficult process and very time consuming. Here are a couple of ways that can get you on the road to improving your credit score.
First, sign up for a secured credit card. Obtaining a standard credit card is unlikely when credit trouble is present. Even if you are able to get it, it comes at a high price by way of astronomical interest rate. However, a secured credit card can be a solution to the problem. Banks have little risk in issuing a secured credit card because it is backed by money you have deposited in a secured account. The way it works is simple: you deposit $1000 in a secured designated savings account at your financial institution, then you receive a credit line up to $1000. Simply put, your charges are backed by money that is already in the bank. Next, start making purchases with your card. Then make sure your very organized--making payments on time, or not spending over your limit. Continue this process for a while and you will be seen less and less as a credit risk and improve your credit score.
Second, if you are able, using a co-signer to get a personal loan or auto loan is a good idea. A co-signer, with good credit, takes on the risk of the loan you apply for. This gives you a very good chance at obtaining the loan. Hopefully, you will have a greater incentive to manage your loan or credit card with the co-signer loan because of not wanting to harm your co-signer's credit. Co-signers are usually close friends or family members. If you can find someone that is willing to take the risk with you, then getting this loan will be beneficial. Make sure you can handle the payments of the loan before taking on any debt, otherwise your credit score could be harmed even more. After a clean record of making your payments for at least 6 months your credit score will start to improve.
It may seem like a slow process to rehabilitate your Credit Score, but a secured credit card, or a co-signer loan are very effective ways to improving your credit score in a more timely manner. Unfortunately there are no magic bullets that will instantly improve your score, but with a little patience these methods will help a lot.
Improving Your Credit ScoreThe Two Best Ways to Begin the Process
