Got Crappy Credit? Here Are The Easiest Ways To Fix It

Bad Credit Isn’t The End Of The World

Maybe you missed a “few” payments, maxed out a card in college, or decided to not pay that $900 hospital bill (that they charged you for Tylenol).

Whatever the reason, bad credit can make life a major hassle.

If you’ve got bad credit, it basically signals that you’re less likely to make payments.

Or in simpler terms, you look like a broke boy that nobody wants to trust with their money.

And this makes it really hard to get a car, a house, or a small business loan.

Or, if you do get approved for something, you’ll likely have to pay much higher interest rates because of how financially sketchy you seem.

But bad credit isn’t the end of the world. 

Rebuilding your credit score is totally doable, and it'll open up a ton of benefits down the road, like financing that car or house at an affordable rate.

Luckily for you, we'll break down the basics, explore different strategies to build a solid score, and show you how to stay on top of your progress.

Understanding Your Credit Score and Report

Building a strong credit score is like building a muscle. It takes knowledge, effort, and most important, consistency.

Think of your credit report as a detailed record of your money borrowing habits.

It includes information like your credit card accounts, loans, payment history, and any public records related to bankruptcies or judgments.

You actually get a free credit report annually from each of the three major credit bureaus: Equifax, Experian, and TransUnion.

Make sure to use the actual official government site AnnualCreditReport.com to check your credit report.

Pro Tip…Don't waste all your free reports at once!

Stagger your requests throughout the year.

Check one report every four months to monitor your progress and identify any potential errors that could be dragging down your score.

But what about a credit “score”? How’s it different than a credit report?

While your credit report provides full details of your credit history, your credit score is a single number summarizing that information for lenders.

And this three-digit number basically acts as a report card for lenders.

Credit scores range from 300 to 850.

It’s impossible to have “zero credit”, as some would think. The lowest you can have is 300.

Although, 300 is basically the same as having “no credit” since it’s abysmally low.

But the higher the score, the better you appear as a borrower, potentially qualifying you for lower interest rates on loans.

Anything above 670 is considered “good”, so that’s the number you want to shoot for as a minimum.

But what factors influence this magic number?

• Payment History (King of the Credit Score Jungle): This is the single most important factor, accounting for roughly 35% of your score. Missing payments is a major credit killer, so pay your bills on time, every time.
  

• Credit Utilization Ratio (The Percentage Game): Imagine your credit card limit (how much you’re allowed to spend) as a pie. This ratio measures how much of that pie you're using (your current balance). Ideally, you want to keep this utilization below 30%. Maxing out your cards constantly hurts your score.
  
  Pro tip: Try to use your credit card for small purchases instead of large ones. This will help keep it below 30% of the limit and make it easier to pay off to build credit.
  

• Length of Credit History (The Longevity Factor): The longer you've had credit accounts open and managed responsibly (even if you rarely use them), the better.
  
  This shows lenders you're a creditworthy borrower over the long haul. All the more reason to get a credit card sooner rather than later and only use it as a credit building tool.
  

• Types of Credit (Diversity is Key): Having a healthy mix of credit products, like credit cards and installment loans (e.g., car loans), can actually boost your score. It demonstrates your ability to handle different types of credit responsibly. That doesn’t mean go out and try to get as many different loans as you can…it’s just good to keep this is mind.
  

• New Credit Inquiries (Don't Go on a Credit Card Spree): Here’s a little known secret…every time you apply for a new credit card or loan, it triggers a "hard inquiry" on your credit report, which can cause a temporary dip in your score.
  
  Applying for too much credit at once can raise red flags for lenders, so make sure you do this as infrequently as possible, even if they say they’re just doing a “soft” pull. Always better to be on the safe side.

Good Habits And Building Blocks for Better Credit

Now that you've grasped the credit score fundamentals, let's get down to business…building a score that makes lenders want to give you a bunch of money.

First, remember that payment history is king.

Set up automatic payments for all your bills to avoid missed payments that can tank your score.

Calendar reminders or budgeting apps like Credit Karma can also become your best friend in making payments.

Next, focus all your energy into shrinking your card balances below 30% of your limit.

Consider tackling the card with the highest balance first, while making minimum payments on the others.

Also, don't ditch your credit cards entirely…you want to USE them as a tool to build your credit.

Use credit cards for everyday purchases and pay them off in full each month. 

But what about if you don’t have a credit card, or can’t get one with bad credit to begin with?

Well, there’s a secret weapon anyone can use called a Secured Credit Card.

How Secured Credit Cards Work:

Think of a secured credit card as a credit card with training wheels. Here's the deal:

• You provide a security deposit (usually equal to your credit limit) upfront.

• The issuer "holds" this deposit in a separate account.

• This deposit becomes your credit limit (the maximum amount you can spend on the card).

The Benefits of Secured Credit Cards:

Secured cards offer several advantages for credit newbies:

• Build Credit History: By using the card responsibly and making on-time payments, you demonstrate your creditworthiness, gradually building a positive credit history.
  

• Potential for Upgrade: After a period of good behavior (usually 6-12 months), the issuer might convert your secured card to an unsecured card with a traditional credit limit, giving you a significant credit score boost.

Credit-Builder Loans: The Double Whammy Of Credit

Similar to a secured credit card, there are also these magical loans called “credit builder loans” that are solely intended to build your credit.

They’re also the best bet for anyone with ZERO credit history.

So instead of getting a loan in order to buy something like a car or a house, these are essentially loans for nothing.

Then you pay them back and it helps build your credit.

Think of it like this…You borrow a set amount, typically a few hundred to a few thousand dollars.

Instead of handing you the cash, the lender stashes it away in a secured savings account.

You then make fixed monthly payments over a designated term, usually 12-24 months.

Once you've faithfully repaid the loan, the lender releases the original amount you borrowed, plus any earned interest, back to you.

So it’s like a double whammy…you get a boost in credit and potentially make a little interest back when you’re done.

However, not all loans are created equal. Here's what to keep in mind when searching for your perfect match:

• Fees and Interest: Be mindful of fees like application or maintenance charges, and compare interest rates to find the most affordable option.
  

• Credit Bureau Reporting: This is crucial. Ensure the lender reports your on-time payments to all three major credit bureaus (Equifax, Experian, TransUnion) for maximum credit score impact. The wider the reach, the better.
  

• Minimum Credit Score Requirement: Some credit-builder loans have minimum credit score requirements to qualify. Check if you're eligible before applying.

When In Doubt…Piggyback

Just like how all your friends ride the coattails of that one successful guy in the friend group, you can build your credit that way too.

This works especially well if your parents are loaded and have great credit, because that good reputation can actually pass down to you.

You just need to be added as an authorized user of their card.

Then you basically get the SAME credit score as them!

If the primary cardholder has a good credit history with on-time payments, their positive record gets reflected on your credit report. This can be a great way to build credit, especially if yours is thin or nonexistent.

You might also gain access to rewards programs, travel benefits, or lower interest rates that come with the authorized card.

However, make sure you don’t become an authorized user on your boy’s card who never pays his bills…

If you become an authorized user of someone with BAD credit, then you’ll get that bad credit too. You might even be jointly liable for payments in certain cases.

The BMM Takeaway

Remember, building a strong credit score is a marathon, not a sprint.

Monitor your progress with free credit reports and consider credit monitoring tools.

Develop long-term habits like responsible budgeting, mindful spending, and on-time payments.

And don’t be afraid to seek professional help for overwhelming debt.

Most importantly, celebrate your progress, no matter how small, and stay focused on your financial goals. By consistently applying these strategies, you'll be well on your way to credit score greatness.