Have Bad Credit? Here’s What You Can Do Anyway!
Bad credit is usually the result of not paying your bills on time repeatedly, whether that means credit card bills, mortgage payments, or both. Those who have bad credit have a hard time obtaining loans for the big purchases that have become necessities in life today, such as cars, and landlords may be wary of signing a lease with someone who has a low credit score.
Everyone wants to be confident that they will be paid on time but even bad credit can’t stop your economic progress – there are ways to manage your bad credit and move ahead.
5 Things You Can Do With Bad Credit, And How
1. Rent an Apartment.
- Not all landlords do credit checks and some advertise to that effect. When you search apartment listings, keep an eye out for this detail.
- Propose a co-signer (presumably a close relative or generous friend) who has good credit, to protect the landlord from your financial history. Note that if you skip out on your rent, the landlord has the right to go after your co-signer, which would likely taint your relationship.
- Collect recommendations – from a previous landlord, from your bank, from your credit card company…from anyone who can vouch for you as responsible, despite the bad credit history.
2. Be Approved for a Car Loan.
- Make a large down payment, so that the debt burden is not extensive.
- Demonstrate that your income is sufficient to cover all your costs, including the new automobile loan bill, as well as car insurance, gas, and maintenance.
- Turn to a credit union, whose standards may be more lenient than a traditional bank.
- Propose a co-signer, similar to the apartment plan, and note that co-signing for a car loan tends to be less intimidating than co-signing for housing.
3. Be Approved for a Mortgage
- The larger the down payment you can make the better, as it not only relieves your debt burden, but it also demonstrates how serious you are – which can lead to “good faith” by the bank that you will indeed pay back the loan on time.
- Carefully check your credit report for errors. If there are any issues, dispute errors.
- Demonstrate a solid history of paying on time through cancelled checks and the like, if you can.
- Turn to a subprime lender – with caution, due to some shady dealers out there
4. Be Approved for a Business Loan
- Note that business credit is different from personal credit (it’s not tied to your Social Security number, for one thing), and build business credit by paying all bills associated with your merchant ID promptly.
5. Obtain a Credit Card
- Some credit cards cater to those with poor credit, where the card is “secured” by a preliminary deposit rather than relying on credit alone. This is not a prepaid card, which is fundamentally a debit card. A secured credit card will help you build credit over time, assuming you pay the bills on time.
- Get a merchant account, and handle it well, so that when your details are reported to the credit bureau, your credit score rises.
One main point of managing your bad credit is to live your life – find a roof over your head, wheels to travel, and a business to bring you income. The other main point is to improve your credit, so that the bad credit report that currently hangs over your head becomes a distant thing of the past.
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