From Red to Black: How to Rebuild Your Credit Score

credit scoreA bad credit score will severely hamper your ability to successfully get much-needed loans, but the side effects of a bad credit score go far beyond that. A few other effects include higher insurance premiums and higher interest rates for credit cards and loans — though, luckily, if you really need to, there are other ways to get a loan with no credit. Sometimes, you might even be denied employment for having a bad credit score, but this mostly applies to managerial posts.

Luckily, there are ways to help you get out of the red and into the black. As mentioned in this article, a bad credit score is not the end. Want to learn how? Well, read on, friend.

Get a New Account

Contrary to popular belief, it’s much better to get a new account versus forever swearing off of using credit cards. The main objective to rebuilding your credit score is to show lenders that you are able to use a credit card responsibly — you can’t do that without a credit card. By showing that you’re able to use your credit card responsibly, you are able to establish a positive payment history and of course, this means that you’ll pick up good spending habits along the way.

Establish Good Spending Habits

This is as simple as a tip can be, but it’s far easier said than done. It takes much more effort to unlearn a bad habit than to learn a new good one right off the bat. You can start by no longer buying things you can’t afford. Always stay below your credit limit. I think it doesn’t have to be said that if you keep doing the same things as before, you’re apt to end up in the same place after.

Budget Ahead of Time

Why is this important? While it might seem obvious, budgeting ensures that you’re able to pay your dues on time. And, no, don’t just pay the minimum, you have to pay off the entire balance. The time for extravagance is far behind you. It’s belt-tightening time. Not a single deficiency should be found in your account.

The reason for this is that more and more businesses are opting to use collector agencies who audit and follow up on any unpaid accounts. If your account does get tagged, the deficiency will then be reported to credit authorities and it will stay on your credit report for seven years. You don’t want to lose all the progress you’ve made over an unpaid library fee, do you?


By this I mean that you have to be consistent. Remember that the ultimate goal is to show creditors that you’re able to build — and maintain — a good credit score. If you want to put an estimate to how long you should keep rinsing and repeating, well, this psychology article should give you an idea.

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