wallet-908569_1280It’s very easy to end up with bad credit, and much harder to clean it up again.  A negative credit rating can come from late payments on monthly bills, default on student loans and more.  In order to improve your credit and get rid of the negative aspects of your credit history, there’s really only one option, and it doesn’t involve those fly-by-night operations that promise to fix your credit instantly.  Turning your bad credit around can seem like a daunting task, but it can be done.

Pay Bills on Time

This may seem like a no-brainer, but it is the first step to repairing your bad credit.  Your monthly bills are due at the same time every month, and you shouldn’t be taken by surprise that the water company wants their money.  Paying your bills on time is important because those companies can report your payment history to credit reporting agencies.

Build a New Credit History

If your financial troubles and bad credit have left you without a credit card, you should be making efforts to get one.  Making payments on a credit card in a timely manner helps to re-establish your credit.  If you are unable to get a traditional credit card, a secured card may be the answer.  However, always make sure the card you choose actually reports your information to a credit reporting agency.  Be aware that putting in too many applications can actually make your credit score go down, so be careful that you only apply for a card when you can be reasonably sure you will get it.  There are also plenty of companies that specialize in bad credit loans.

Avoid Subprime Credit Cards

Many credit cards marketed to people with bad credit are actually subprime credit cards.  This type of credit card carries high interest rates and very high fees that can leave you with more debt and worse credit.  These card companies are targeting people who are trying to rebuild their credit and are the worst kind of predatory lenders.

Don’t Use Prepaid Credit Cards

Prepaid “credit” cards will not help rebuild your credit score because they do not typically report your information to credit bureaus.  Although there are some that do in fact help you build credit. They are not actually credit cards, so they don’t do much for rebuilding your credit.  Many of them have hidden fees, too, making most prepaid “credit” cards a very expensive alternative to a debit card.

Create Responsible Spending Habits

In order to turn your credit around, you have to turn your credit around.  There’s no substitute for learning how to create a budget and stick to it.  Don’t spend beyond your means, pay your bills on time every month and always pay more than the minimum balance on credit card payments.  If possible, you should pay off your credit card in full every month.  If you’re trying to build good credit, use a credit card specifically to pay your monthly bills, and then pay off the card with your bill money.  This will help you establish a strong payment history and help to effectively turn your credit around.