The attitude around credit is unfortunate sometimes. And it isn’t just about “bad credit” – in some scenarios, even having “fair credit” is seen as a negative, and don’t even mention having no credit at all. For some reason, that’s considered worse than having bad credit. It seems that unless you have A+ perfect credit, which so many of us do not, it’s very hard to function in the every day world easily. Without good credit, you can be turned down for major things like home loans, vehicles, right on down to the smaller things like credit cards or financing furniture. Most utilities such as power companies, water, and even cable and phone services ask to perform a credit check before providing you with a service. Unless you have great credit, you’ll be forced to pay exorbitant deposits and often have higher monthly payments than your peers with good credit.
And yet, the only way to improve your credit is to accept these terms and overpay for goods and services, all in the name of improving your credit over time with good monthly payments. It hardly seems fair, does it?
Luckily, there are ways to improve your credit in a reasonably quick manner, without having to fork over cash you don’t have or signing up for things you don’t need to just to have a payment record. We’ll explore a couple of these ways below.
Prepaid/Secured Credit Card
One of the bummers about not having good credit is that you usually can’t get credit cards – and yet, so many things in life require one (car rentals for instance – most rental companies don’t even allow you to pay with a cash or check, or even a debit card – it must be a credit card! Many hotels operate this way also).
A good workaround is to get a secured or “prepaid” credit card. There are tons of options out there for these. Usually, you’ll pay a “deposit” between $90 and $200, which is added to the card as part of your credit limit. Experts advise to only use the card for one purchase a month – a power bill or groceries, perhaps – then to pay it off ASAP, before the bill is due every month. Just a few months of a timely pay record will shoot your credit score up exponentially. But you have to pay it on time – if you don’t, it’ll just make your credit worse.
In time, with a record of good payments, your credit score will be increased, and the card will function just like any other credit card. And you’ll have a better credit score!
There are lots of companies out there that offer to help clean up your credit. Some of them work by buying off and consolidating your debt into one monthly payment which you then pay to them every month. Others work by taking a monthly fee to call around to debtors and creditors and making arrangements on your behalf. Sometimes they’ll find credit marks that can be removed, or haggle/bargain with creditors to reduce your bills.
Getting a little help from credit repair companies is a great idea, so long as you vet the company carefully and choose one that best suits your needs. Make sure it’s a reputable company with good ratings and reviews. Beware of any company whose fees are super expensive or who don’t make guarantees.
Whether you chose a secured card or a credit repair company, it’s easier than you think to repair your credit and make it something you can work with. It just takes dedication and a few months of adequate, on time payments. You can do this!