Bad credit can be the result of poor financial choices or life changes, such as a divorce or illness, that prevent you from meeting your financial obligations. Bad credit may also result from credit report errors.
There are several things you can do to rebuild bad credit, but it’s not necessarily a speedy process.
What is Considered Bad Credit?
Bad credit is defined as a credit history that includes negative remarks, such as late payments or charge-off accounts, which are damaging to your credit score. According to myFICO, a poor or bad FICO credit score is one that falls between 300 and 579, out of a possible 850.
There is no standard time frame for how long it can take to repair past credit mistakes and increase your score into the “good credit” range, which means a FICO score of 670 or better.
However, if you had a fair credit score (a score ranging from 580 to 669) before it dipped, it may not take as long to move back up from the bad credit to fair credit range again.
Won’t Negative Marks Just Fall Off Eventually?
The credit bureau reporting negative information will specify the month and year it will be removed. If your bad-credit event happened recently, it won’t be removed for up to seven years, so you’ll most likely have to wait to see your score improve. But if the bad-credit event happened years ago, you may be closer to a score increase than you realize.
For example, a charge-off, foreclosure, bankruptcy, or court judgment may be more difficult to recover from than one late payment. Most negative marks will be removed from your credit report after 7-10 years depending on the item. Removal is based on the reporting of the first late or missed payment.
Use Credit Cards Wisely While Building Your Credit
Responsible credit card use can be part of your credit recovery. Credit card use allows you to build a positive revolving credit history when paid on time. As long as you keep the balance on the card low or pay in full each month, then you’ll also promote a healthy credit usage ratio, giving your score another boost.
For example, if you have $20,000 in available credit, and you’re using $5,000 of it, your credit utilization score would be 25 percent. Paying off outstanding debts to keep your credit utilization below 30 percent may positively amend your credit score. A credit utilization ratio of 20 percent or lower is even better.
And, of course, pay on time each month. You may consider consolidating or transferring your balance to a balance transfer credit card, which often comes with a lower interest rate, so you can pay down the balance faster than before.
Become an authorized user on someone else’s credit card, which provides charging privileges without making you directly responsible for the debt. If they have a track record of using the card responsibly, it may give your credit score a boost.
Is It Worth It To Get A Secured Credit Card?
When you have bad credit, your card options may be limited to secured cards. These cards require a cash deposit to open your account, which doubles as your credit limit. A secured credit card can be used the same as any other credit card.
Ensure that any secured card you apply for does report account activity to the credit bureaus. The best balance transfer credit card promotional offers (with the most favorable interest rates and terms) are typically reserved for people with good to excellent credit. While a credit card can be a helpful way to turn around a bad credit rating, there are other methods you can try that may help raise your score.
A retail store credit card, which may be easier to qualify for with a lower credit score. Most importantly, remember to be patient and give your efforts time to rebuild bad credit and show results.
Be Patient, This Process Takes Time
While bad credit mark can take seven to 10 years to be removed from your credit report, you don’t have to wait that long to start improving your credit health.
How long it takes to rebuild credit varies with each person, but taking appropriate steps could benefit you in the long run.
Because it takes at least seven years for credit details to be removed from a credit report, someone with several missed payments over the past two years could expect it to take longer for their score to improve. Someone with a few missed payments six years ago could see a faster improvement, provided the payment history since then has been excellent.
Using a service, like A+ Credit Repair, who will dispute debts on your behalf can give you a leg up on the process and move things along faster. Contact us now to start rebuilding your credit today.
