From Bad Credit to Good Credit

What is Bad Credit?

Bad credit is the record on your credit report that tells lenders, landlords, employers, and more your negative history in multiple financial areas. If you've been evicted, that's on your credit report. If you were late on a credit card payment, that, too, is on your credit report. These types of negative reports by retail, lending, and proprietary institutions add up to bad credit.

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What Causes Bad Credit?

A number of things cause bad credit. They include:

• No credit at all. That is, no credit cards or loans outstanding or leases, et cetera.
• Too many credit card applications.
• Too many credit cards with high debt.
• Evictions.
• Defaulted car loans or mortgages.
• Consistent late payments or over-drafted accounts.

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How Do I Decrease Bad Credit and Increase Good Credit?

There are many ways to decrease bad credit and increase good credit so that you will qualify for a low auto loan rate. With a little effort, you could qualify for a lower auto loan rate within six months.

• Pay down your credit cards so that there is equal distribution of debt.


• Stop applying for credit cards.


• Close credit card accounts that you do not use, but keep your oldest one open.


• Pay off debts listed on your credit report as outstanding.


• If there are any mistakes or old debts that have been paid off still listed, contact the credit agency and get it fixed.


• If you are having problems getting companies to listen to you, accept your payments, or remove incorrect items from your credit report, contact the Consumer Credit Counseling Service chapter in your area.

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How Do I Maintain Good Credit?

Maintaining good credit is much easier than fixing credit mistakes. By paying attention to a few small details, you will save yourself a world of time and trouble later on. Some things you can do include:

• Create a budget and stick to it.


• Use credit cards to keep track of your expenses and keep the balances low.


• Choose automatic payment options so that you are never late on bills.


• Only apply for a new credit card if you really need it.


• Continuously check your credit reports at least annually to make sure that the information is correct.

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