Bad credit can be like really bad breath you know you have a problem, no one wants to go near you and you feel like an immediate fix (like a breath mint) will only be temporary. And while you can keep your mouth shut and avoid close talking until you get a chance to brush your teeth, it can be difficult to avoid using credit especially when your credit past isn’t the best.
So how do you secure a loan when your credit is bad? Here are a few common strategies:
1. Start out smaller If you know youll need a mortgage or college loan in a few years, get to work on your credit by going after a more achievable loan, like a credit card, first. Getting a credit card with bad credit takes a bit less work than getting a mortgage might. Once approved for the credit card, be careful about your credit use, pay on time and never max it out. A good payment history on an existing loan can help reestablish a positive credit score.
2. Keep an eye on your credit . A good rule of thumb is to review your report regularly at least once a year – to ensure no errors or new negative information shows up, and to monitor your progress toward a better score and report.
3. Build up a down payment How much money you can put toward a down payment can affect your likelihood to get several key types of loans, including car and home loans. In addition to reducing the amount youll need to borrow, a down payment tells the lender you can manage money well enough to save it. A down payment speaks to your ability to create a budget and commit to a financial goal.
4. Explore financing options While banks are the most common source of virtually every type of loan, theyre far from the only ones. Look at all your borrowing options from credit unions to online lenders and even a personal loan from friends or family to ensure youre getting the best possible loan at the best possible terms.
This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.
Published by permission from ConsumerInfo.com, Inc. © 2013 ConsumerInfo.com, Inc. All rights reserved.