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Bad credit can be a burden for otherwise good
credit. It may not seem fair at times that
financial mistakes in the past can haunt you in
the present, but with a little bit of work and
some time bad credit can be turned around and
repaired.
The important thing to remember is that
options exist even for people with bad
credit… and that just because it's bad now
doesn't mean that it always will be.
What is credit, anyway?
Credit, also known as a credit rating, is an
indication to potential lenders and service
providers as to how likely a person is to repay
the loan or credit line that they're offered, or
how likely they are to pay their bills on
time.
If you have good credit then you have a high
credit rating, and have paid your bills on time
most of the time in the past.
If you have bad credit then you have a low
credit rating, and have had problems paying your
bills on time or haven't paid some of them at
all.
People with bad credit are considered a risk
for new credit lines because of their past
performance, and are usually either denied
credit or services with new providers or have to
pay security deposits and higher interest rates
than those people with good credit.
What options exist for people who have
less-than-perfect credit?
If you have bad credit then it might seem
like you can't get anyone to take the risk to
extend you a loan or credit line, at least at
first glance.
In reality, though, there is an entire
industry of bad credit lenders, from credit card
companies to cheque advance lenders… even
automotive financing and car title loans.
Many of these lenders do require security
deposits or higher interest rates, but in
exchange they offer services that you might
otherwise be unable to get
Some of these lenders don't even check your
credit… though it's very likely that their
patrons either have bad or no credit, they offer
the same terms and rates to everyone without
checking.
How can you repair your credit rating?
Every day it seems like there are more
companies offering amazing credit repair
services, but many of them either don't work
like they claim that they do, cost you more than
they're worth, or are of questionable
legality.
The desperation to get rid of bad credit can
open you up to some scams that are mixed in with
the legitimate services, so take care when
dealing with any of these companies.
A far better option is to take care managing
your finances and repair your credit on your
own… it may take longer, but it usually
ends up being cheaper in the long run.
Take care to pay your bills on time, and make
payment arrangements to clear old debts. At the
same time, you should establish one or two lines
of credit with low credit limits (to keep them
from getting out of control). Make regular
on-time payments to these credit lines, letting
the providers report the payments on your credit
report.
As time goes by and you pay off old debts,
these positive reports will overshadow the old
negative ones, and the older ones will
eventually be removed from your report
altogether.
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