Give Your Bad Credit a Makeover

/ BY / Credit Score

Are you a fan of makeover shows, where fashion experts help people change their image from dull and dowdy to stylish and stunning? It takes time and effort to complete the transformation, but the results are worth it.

But wardrobe and styling aren't the only things that sometimes require makeovers. If you've got bad credit, for example, you've probably found that everything from getting a car loan to finding a job is a lot harder.

If you're tired of suffering from the effects of bad credit and want to improve your credit score, there are some steps that you can take to improve it. Here are some suggestions for getting started:

Figure out where you went wrong.

If you were changing your clothing style, you'd take a long look at your current wardrobe to see what's working or not working for you. It's no different when it comes to changing your credit status.

Ask yourself why you've got a bad credit rating. It may be due to circumstances beyond your control-a job loss or an illness, for example. But in many cases, people simply spend more money than they have, adding to their credit card debt without having the means to pay that debt back. You need to be honest with yourself about how you got to this point and-even more important-about whether or not you're willing to make the financial and lifestyle changes required to raise your credit score.

Check your credit report.

Under federal law, you're entitled every year to one free copy of your credit report from each of the three major credit reporting agencies. Sometimes there can be incorrect information on a report that hurts your credit rating.

Visit to apply for a copy of your credit report, and to learn how to get any inaccurate and harmful information removed from those reports.

Budget for better credit.

Take a look at your current financial situation and figure out how you're going to handle your payments for credit cards and other debt responsibly. Put yourself on a budget and, if necessary, put your credit cards away for a few months until you've made a dent in your debt.

Get help from a credit counseling agency if you can't do this on your own. You may be able to find recommendations on such services from your state's consumer protection agency or from your bank or credit union.

Prove that you're credit worthy.

To improve your credit rating you have to establish yourself as someone who is able to handle credit responsibly. Make your credit card payments and any other loan payments on time to avoid late charges or missed payments, both of which can reduce your credit score. Pay at least the minimum amount owed on your credit card (and more if you can afford to).

Establish a good pattern with new credit.

Once you've gotten any old debt under control, consider demonstrating that you can handle new credit debt as well.

You might want to apply for store credit cards, which are usually easier to obtain than bank credit cards. You can also apply for a bank credit card designed especially for people with poor credit. But don't charge more than you can pay off each month on either of those cards; their interest rates are usually very high.

One more thing to keep in mind: although prepaid credit cards can be convenient, they won't help you improve your credit score, because you're not actually getting credit when you use them. You're simply pre-loading a card with cash.

Have patience.

If you were doing your own makeover, it's unlikely that you'd be able to afford replacing everything in your closet at once. You'd take small steps, gradually adding the new style of clothing that you want to wear.

It also takes time to rebuild your credit report-months and sometimes even years. But if you stick with the plan, you'll find your efforts rewarded over time with a credit rating that looks much better, and that can yield lower interest rates on loans, better insurance rates and maybe even a better chance of landing a job you really want.

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Please note your financial situation is unique and our tips & advice presented here may not be appropriate for your situation. recommends that you seek different advice & opinions from your own accountant or financial adviser who understands your individual circumstances before making any important decisions or implementing any financial strategy.