Can I Rebuild my Credit Score if I Have Bad Credit

In short, yes. There are several reasons why people can end up with a blemish on their credit record, which can be frustrating and restrictive. Credit records don’t take all factors into account, which can make a credit problem feel unfair. Thankfully, there are several steps you can start to take in order to rebuild your credit score if it has taken a hit recently.

Below we’ll look at a strategy that can help you improve your score and get back to where you were.

It Doesn’t Happen Overnight

Building a decent credit score can take time and if you are wondering ‘what do I do if I have bad credit’ the first thing is to have patience. You may even have to make a few sacrifices as you build your score, but you’ll be glad you did further down the line. The key is to be consistent and don’t grow impatient. Trying to run too quickly by applying for credit when your score is insufficient will leave a rejection sitting on your record, which will then reduce your score in the short-term and put off any other potential lenders who are performing a credit check.

Start Small

There are several lenders in the market that specialize in lending to those with bad credit. However, because someone with a lower score is classed as a higher risk, the interest rates are usually higher to reflect the greater risk they are taking.

A good way to start to make you look more appealing to mainstream lenders again is to borrow money and make all the repayments on time. However, if you’re paying high APR rates you want to minimize the impact the repayments have on your financial health.

Borrowing small amounts you can comfortably repay over a short period starts to build a positive history.

Start Building a History of Making Payments to Regain Trust

There are several types of lending you can take advantage of to achieve this. You may be able to find a catalogue willing to give you a small credit limit, or a credit card company that specializes in cards for those with bad credit. Many payday lenders can also help those with bad credit.

All these forms of lending are likely to be for smaller amounts over a shorter period. This has two benefits. It keeps your borrowing to a manageable level while building a repayment history, and they minimise the amount of interest you’ll be charged while you’re paying higher interest rates.

Consistency Is Key to Overcoming Bad Credit

Not having any debt is nearly as bad as having bad credit to most lenders. They like to see you’ve demonstrated making monthly payments on time. It reassures them that you can manage your money and pay your way. If you go for a payday loan, credit card, or catalogue, only spend small amounts and ensure you clear them on time. Then repeat the process. With each successful monthly payment and completed agreement, your score will start to creep in the right direction.

Let us know whether these tips work for you!

Thanks to Ana