Rebuilding Your Credit After Losing Ground
Posted on Saturday, September 26th, 2009 at 4:11 pmWhether it was a divorce, a bankruptcy, or a foreclosure, or a series of small events that sent your credit score sinking, it’s time now to focus on gaining ground instead of losing it. Luckily, credit scores are not permanent. They change with every new situation, depending on how you manage your finances. A credit score is maintained based on behaviors on debt repayment, credit limits, and other characteristics of creditworthiness. If you’ve tanked your score, there are still ways to rebuild it, even when you have bad or no credit. One way is to obtain lines of credit that do not require a credit check to establish a good payment history. For that, you will have to contact secured credit card lenders or cash advance lenders for bad credit problems.
Unconventional Sources Of Credit
The Catch-22 when you’re in the hole is that in order to obtain new credit terms, you have to typically present a good credit score. Since that’s not possible after disastrous financial events, you have to move on to unconventional sources of credit like payday loans or secured credit or debit cards to start a new payment history in your credit file.
- Payday Loans - With a payday loan, there is no required credit check, although you have to have some form of employment that they can check. The loan is required to be paid back on the next paycheck cycle, so it should be used only to straddle income gaps that are very short in duration. The money is deposited into your account and you can use it any way you like.
- Secured Credit Cards – A secured credit card is not really a loan. It is a way to establish credit by putting your cash resources up as collateral for a secured credit or debit card. It is like loaning yourself money for the purpose of establishing a credit history. There are no credit checks, no late payments, and no fees, usually, however you have to front the money for this method.