The current American economy has created financial difficulties for many people. Those who have been hit hardest are having trouble paying credit card bills, utilities, and even making mortgage payments. However, even through a tough economy, people with bad credit (and worsening) can make efforts to improve their credit score.
If you have suffered foreclosure, repossession, and credit card cancellation, you can still work to turn bad credit into good. Below are five intelligent ways to start making a positive mark on your credit report. However, remember that turning bad credit into good will require effort on your part, and it does not improve overnight. Plan at least six months to a year to actually make some headway on your credit report.
1. Get current with your debts
In order to start making a positive mark on your credit report, you need to start managing your current debts. If you currently have outstanding credit card debt, loans, or other debt that is delinquent, make the effort to catch up on payments and get current. That may mean paying a credit card amount in full or simply getting current with your car payment. Late payments of 30 or more days and delinquencies show up on your credit report and have an adverse effect. Get current as soon as you can.
2. Use only one or two credit cards
If you have many credit cards, use only one or two that has the best interest rate. However, don’t close your other accounts. Closing a credit card account can also negatively affect your credit score. Simply make sure you either pay off the balance or make the minimum payment each month.
3. Use a secured credit card
If you have no credit cards, or your credit cards have all been cancelled, try to obtain a secured credit card. A secured card allows you to make a deposit into an account with a credit card company in exchange for a card with a credit limit up to the amount of the deposit. For instance, you may choose to make a deposit of $300 after approval of a secured card. Your credit card will arrive and have a credit limit of $300, which you can use to start making small charges that you will pay off regularly.
4. Apply for a gas card
Most gasoline companies are generous with their approval for gas credit cards. You can use these cards at any company gasoline station or convenience stores to charge for gas or food items. Be sure to pay your bill on time each month.
5. Contact your credit card company
If all else fails and you are simply unable to make all your payments on time, contact your credit card company. Rather than making harassing phone calls and letters on a delinquent account, a credit company would much rather hear from you and work with your situation to resolve your debt. Making the first step with a phone call can help your credit report immensely.
Write to Grace Carter at grace@creditdonkey.com
