Yes, You Can: Get a Good Credit Card with a Bad Money History


ModestMoney.com Top Finance Blogs

Archives

credit-card-851502_640A lot of people have a bad history with money. Maybe they took out a loan that was too large to pay back or maybe they lost their jobs and had trouble just getting by, causing their loans to default. Either way, if you have a bad history with money, you may think that you will no longer be able to qualify for a good credit card.

The good news is that there are things you can start doing today to fix your credit so you get approved for those credit cards you may need. It takes time and it isn’t a cakewalk, but if you try hard enough, you can rid yourself of your bad money history and move forward financial. Here are a few tips to establishing credit and get back on track.

Look at Your Credit Report

The first thing any financial institution does before approving loans or a line of credit is to look at your credit history, so you need to know exactly what they will find so you can be prepared.

There are plenty of websites that you can use to look at your credit history, but the important thing is that you look at it thoroughly. There could be mistakes or items that should be expunged from your record but are still on there. These will hurt your chances of improving your credit, so should dispute them with the credit reporting companies. If the same thing appears on all three reports, you need to dispute it with all three companies to make sure the mistakes are expunged properly.

Start With Outstanding Debt

Once you know what’s on your credit history, then you can start fixing it. It will take some time, but you need to start with the largest debts on your report and try to get them taken care of.

You can often negotiate a price that will take care of defaulted loans. You will need to pay a lump sum, but you may be able to settle for pennies on the dollar, saving you money in the long run. Start with the biggest debts and work your way down until all of your outstanding debts are cleared.

Keep Up With Payments

Just one missed payment can affect your credit score, so make sure to keep up with any payments you currently have so the problem doesn’t get worse.

Make sure you pay all of your current bills before you throw money at outstanding debt. This way, your score won’t get any lower and it may even improve a little if you are constantly on time with payments. Pay off all of your credit cards each month if you have any with balances and never be late with payments on things like utilities, car loans or mortgages.

Again, your credit will not improve overnight: it’s a long process that takes time. But if you have a plan and stick with it, you’ll be approved for those new credit cards sooner than you think.

Nicole Humphries works in the personal finance sector and contributes to a selection of blogs with her articles on personal finances.

About the author