Starting Over from Bad Credit

August 9th, 2017 | Author:

[Y]ou hit rock bottom with your credit. All of your accounts went to collections and your car was repossessed. You don’t even want to check your credit score because you know it’s bad. While the situation might seem hopeless, you can turn it around. Once you’ve lost any credit worthiness, you are ready to work on rebuilding.

Check Your Credit
As much as you don’t want to, you need to check your credit report. You need to know what it says, the good and the bad. Make sure everything is accurate even if it isn’t good. Make a note of all of the negative information listed. Don’t let it overwhelm you, but just know what others will see.

Get a Secured Credit Card

If your credit is really bad, you probably won’t qualify for a traditional credit card. However, you can get a secured credit card, which means you will pay a deposit to the creditor in return for a card with that much credit. If you pay $500, your credit card will have a credit limit of $500. Make sure the creditor reports to at least one of the credit reporting agencies. It will report just like any other credit card, so as long as you pay your bill on time or pay the balance, it will add positive information to your account.

Get a Small Personal Loan

If you can get approved for a collateral loan through your bank or another lender, this is another way you can begin re-establishing your credit. A collateral loan uses something you own to back the loan if you should default.


Unfortunately, you’ll have to play the waiting game. It often takes six months for the information on a new loan or credit card to show up on your credit report. At that time, you’ll see at least a small improvement in your credit score. Once you have begun to establish an improved credit history, other creditors will be willing to give you a chance. Then, you can get an unsecured credit card or other form of credit to help you continue to build good credit.

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