The process of repairing your credit can be hard, especially if you feel like you are starting from scratch. Luckily, there are a number of simple, straightforward steps you can take to turn your credit around – no matter how low your initial score is.

It is still important to understand that there is no quick fix for your credit in many cases. It can take time to raise your credit score, but it can be done if you're persistent.

First, What is a Good Credit Score?

In general, from the basic FICO score range of 300 to 850, any credit score above 700 is considered "good".

Keeping a credit score of 700 or higher is important for many reasons, since it opens you up to the world of credit – a world where you are more likely to be approved for loans, qualify for lower interest rates, and even enjoy better rates on car insurance and mortgages. Some companies may also consider a good credit score a sign of a trustworthy employee, which can help you get a job.

For many people, seeing a low score on their credit report is an instant source of stress. The good news is that these numbers are not a life sentence. It may take a few years, but clearing up poor credit may be easier than you'd expect – as long as you take the correct steps and don't give up.

Getting started can be the hardest part. So, here are 5 simple steps you can take today to get your credit score on the right track.

1. Avoid Late Payments

Your payment history is a critical part of your overall credit score. You might think that if your credit score is already pretty low, one more late payment can't possibly do any more damage. Unfortunately, any and all late payments are a sure way to hurt your credit score. The first step to getting your credit right is to stop further damage from occurring. Set up a budget to start making any and all payments on time.

2. Clear Up Old Debt

The first tip leads right into the second tip. To raise your credit score, you need to pay off your old debts. If your goal is to become debt free, then start with your highest interest rate debts first. If you just want a quick boost to your credit score, then your first priority should be paying off credit card debt in order to lower your utilization rate.

Credit bureaus use your credit history in order to calculate your credit score. By slowly paying off old debt, this proves that you're turning things around, and it will likely reflect on your credit report within one to two months.

If you need help setting up a budget plan, there are local nonprofit credit counseling agencies that aid you in this process. In many cases they can help you set up easy monthly payments that can reduce your stress while tackling your old debts.

It is extremely important to choose a reputable credit counseling agency, such as the National Foundation for Credit Counseling, which operates in each state. You are essentially trusting this company with your financial future, so be sure to do your research.

3. Try a Secured Credit Card

If your score is "very low" (less than 550), then your credit cards may have already been closed or charged off and it may be very difficult or impossible to get a new unsecured credit card with a reasonable credit limit. In cases like this, a secured credit card may be the best way for you reestablish your credit.

A secured credit card uses your own money as collateral. For example, you could put down a 300 dollar deposit and you get a credit card with a 300 dollar credit limit. This deposit is used to pay off the credit card in the event that you stop making payments and default on your debt. As you continue to use this card and make payments on time over a period of months, you can request gradual increases on your line of credit.

As time passes, your credit score will improve, and you'll eventually be able to apply for a normal unsecured credit card once again. Just make sure that your secured credit card reports payments to all three major credit bureaus, otherwise it won't show up on your credit reports and it won't raise your credit score.

Remember, if you do manage to get a new credit card - never spend more than you can afford to pay back. It's important to stop the old habits that resulted in bad credit in the first place. Use your newfound credit wisely.

4. Take New Credit Opportunities When Available

With that said, it is important to jump on new, legitimate credit opportunities to help raise your credit score when the opportunities arise.

For instance, when you are eligible for a credit line with a decent interest rate, then take it. Make sure to use no more than 25 percent of the available balance. Other opportunities may also present themselves, such as department store credit cards or loan servicers offering you new deals to pay off your mortgage or student loans. After ensuring these deals are not going to be detrimental with hidden fees or high interest rates, having these active accounts in good standing is actually helpful.

Having a good credit mix with many different types of accounts in good standing is better than having only credit cards, or only installment loans, etc.

5. Seek Out Subprime Lenders for Bigger Purchases

The world of subprime lending should be a place where lenders seek to help people with poor credit who are willing to help make amends. In the US, subprime lenders generally describes any lenders who work with FICO scores of less than 640. With a credit score this low, you've likely encountered trouble getting approved for car loans, credit cards, and maybe even apartments.

Unfortunately, the reality is that the subprime industry is rife with scams and untrustworthy practices. It is extremely important to do your research on any lender or entity you consider doing business with. Look up reviews on every website you can find, call them and ask questions, and ask for customer referrals. Most importantly, find out if the company in accredited with the Better Business Bureau (BBB), and check out the lender's grade and customer reviews there as well.

Only after you've thoroughly researched a lender should you move forward. Skepticism aside, subprime lending may help some people get larger loans for things such as cars. Paying off these loans also reflects very well on your credit score.

Bottom Line

These tips are focused on the long term, because there is no short term, quick fix for credit. Fixing your credit is a step-by-step process, and it takes time. If you are ready to commit yourself to a better credit score, these 5 tips may help you turn your credit around when you need it most.

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