How to Get Back your Good Credit Rating

So many things we do every day are dependent on a good credit rating. Try getting a credit card, renting an apartment, financing a large purchase, or buying a car, just to name a few, without good credit, and reality will set in.

If you don't make payments to creditors on time or you miss a payment, you are reported to the credit bureau. The credit bureau, in turn, adds this to your credit report. If you are guilty of habitually being slow in making payments, or default on a loan, you will suffer a bad credit rating and a low credit score.

Many doors will be closed to you when your credit score is low. You will have a hard time getting a loan, a credit card, renting a car or doing many of the other things you have grown accustomed to. A bad credit rating might even keep you from obtaining certain jobs. For these reasons it is important that you protect your good credit rating. If unforeseen circumstances have affected your credit worthiness, you should start repairing your credit as soon as possible.

How to repair your credit rating is usually a slow process. You need to build your credit rating little by little over a long period of time. Although you might consider going to a reputable company offering credit repair services, you can repair your own credit.

A good place to start repairing your credit right away is to get your credit report from the credit bureau, and examine it carefully for errors. If you don't find any errors, you can then begin repairing your credit.

First, get a secured credit card and use it regularly but cautiously. Make your monthly payment amounts on time and in full. Secured credit cards are issued by companies that usually cater to people who have bad credit, and you are usually required to give an initial deposit equal to the card's credit limit. For example, you give the company $500 for a card with a $500 credit limit. They are authorized to use that deposit against any balance you have that remains outstanding for too long. As you can see, by doing this, the credit card company does not assume any risk because you will never owe more money than they are holding as your deposit.

Secured cards also require annual fees that most regular credit cards do not. Using secured credit cards and paying the bills on time is one of the best ways to start improving your credit rating. Your goal is to develop a history that shows lenders that you take your debts seriously, and that is the only thing lenders require from you. They want to be paid in full and on time. Paying bills on time helps you establish a good history, and it eliminates late fees and other financial penalties that make paying off your debts so difficult.

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