How to Fix a Bad Credit Rating

If you plan to finance a vehicle or buy a home, you'll need to periodically monitor your credit score and maintain satisfactory credit. If you already have a low credit rating, now is the time to make improvements. Fixing bad credit isn't easy. But with a little persistence and self-control, you can add a few points to your credit score each month.

Instructions

Difficulty: Challenging

1. Apply for a secured credit card. After a bankruptcy or foreclosure, it's important to re-build credit. A secured credit card can help. You'll have to pay a deposit. However, the bank guarantees approval.
2. Finance a new or used vehicle. Ironically, buying a new car with bad credit can improve your situation. Since the car serves as collateral, auto lenders regularly approve bad credit applicants for vehicle loans. Of course, the interest rate is high. Make on-time payments each month and boost your credit rating.
3. Take advantage of someone else's good name. If you have a friend, spouse or sibling with excellent credit, ask them to add your name to one of their accounts. You'll benefit every time they make an on-time payment or pay off a debt.
4. Maintain old credit accounts. Canceling an old credit account seems like a smart move. On the contrary, this action can destroy your credit rating. Credit length or history plays a role in credit scoring. Canceling an old account decreases your credit history and reduces your score.
5. Dispute credit report inaccuracies. With regards to credit rating, what you don't know can hurt you. An unfamiliar account or a reporting error can make is difficult to buy a home or car. Check your report annually and promptly address wrong information.