What steps can consumers take to rebuild their credit?

Many consumers are currently interested in having the ability to rebuild their low credit score, but may not know how to go about doing so.

Get a Secured Credit Card

Fortunately, there are a number of ways in which consumers can boost their credit scores over the course of a few months or more, and open themselves to a new world of dealing with their finances. One of the simplest ways to do so could be to seek out a secured credit card.

This type of account differs from a traditional credit card in one very specific way: It requires a down payment to establish its overall credit limit, but not a credit check. This means that borrowers will likely be able to get this card for a minimal investment and then improve their scores through responsible use such as tapping it to make a purchase only occasionally, and keeping balances low, and making all payments on time and in full. However, not all of these cards report their status to the credit monitoring bureaus, meaning that borrowers will have to be careful to select one which does so.

It’s also important for those seeking secured cards to keep in mind that these cards typically come with much higher interest rates and fees than do traditional credit cards, the report said. For this reason, it can often be a somewhat costly proposition, particularly for those who make a habit of carrying a balance from one month to the next. As a consequence, it might be a good idea for borrowers to use this kind of card only as a kind of introduction to the world of borrowing, and to stop using it once their ratings are improved.

Find a Cosigner

Another way for consumers to improve their credit standing, without facing the higher costs to which secured accounts sometimes lead, is to find someone to co-sign on a new account. However, this can be extremely risky for the person whose credit standing is better-established because they are equally responsible for whatever debt is incurred on the new card, regardless of who ultimately ends up using (or misusing) it.

Credit repair isn’t always the easiest process but it is typically extremely beneficial for those who are conscientious in pursuing it. Often, all it takes is hard work and diligence in demanding that your credit reports remain fair, accurate, and substantiated.

Posted in Credit 101
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