Your credit score ranges from 300 to 850 on the most popularly used credit score scales. The exact definition of good and bad credit varies, but generally, anything below 650 is considered “fair” credit while anything below 620 is considered “bad” and you may have difficulty qualifying for a loan, or receive high “sub-prime” interest rates if you do get approved.

You may find out that you have bad credit when you try to get a loan and are denied or restricted to a high interest rate. You may also find out by pulling your credit report and checking your credit score. You may just be aware that your credit probably isn’t so great, especially if you know you have declared bankruptcy or been late on payments.

Regardless of the reason, once you figure out that you need to make some changes, you need to make a decision that you are going to dedicate yourself to fixing the problem. Unfortunately, the answer to how do I repair my bad credit is oftentimes that you do so slowly and through dedicated effort; you need to be committed to staying the course with your repair efforts.


How Do I Repair My Bad Credit

The first thing you need to do to repair your credit is to stop doing things that hurt it and to start doing things that help it. This means you need to:

  • Pay Down Your Debt. Your credit utilization should be at 30 percent or less of the amount of credit available to you in order to get the best score on this component of your credit rating. That means if you have a $1000 line of credit, don’t use more than $300 of it.
  • Make all payments on time: Payments that are late can drag your score down quickly, especially if they are more than 30 days late, more than 60 days late or more than 90 days late.
  • Stop opening new credit cards: Too many inquiries (requests from a creditor to check your score) can hurt your score by suggesting to lenders that you are about to start spending out of control or that you are living beyond your means and just borrowing.


Credit Without Credit Cards

Making on time payments is the key to raising your score, and if you don’t have a card, you will have a difficult time raising your score. If you can’t qualify for a standard credit card, apply for a secured card, which is a card where you put collateral in the form of cash into an account and your credit line is equal to the cash you deposit. Just make sure the lender reports to the major credit bureaus.

Be aware that secured cards may have high fees and interest rates, so consider it a temporary solution.

When you are trying to repair your credit card, there are some pitfalls you should avoid. The main thing to watch out for is unscrupulous companies who promise to repair your credit for you or clean your credit report. This generally does not work. Credit card companies and bureaus won’t remove negative information unless it is inaccurate, and lying to get information removed can be considered fraud.

Likewise, some companies will promise to get you a totally new credit report or social security number. This is normally done using potentially illegal and fraudulent methods, such as using an EIN (employer identification number) to open new credit cards in your name.

Remember that if something seems too good to be true, it probably is. Don’t look for fast or easy fixes to the question of how do I repair my bad credit because there probably aren’t any. Instead, buckle down, make a budget, watch your spending, pay off your debt and use your cards wisely. Don’t forget to check your progress by checking your score periodically to see how well you are doing.

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