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5 Tips on How to Improve Bad Credit

The content is accurate at the time of publication and is subject to change.

Building credit is very much like losing weight - getting there takes a lot of time and work. Quick solutions may lead you into a trap and leave you worse off than you were before. But if you are worried about your credit situation, that's a start - a lot of Americans aren't even aware that they are in trouble until they have to apply for a mortgage or get a car loan. But if you are determined to make things right, you'll eventually succeed, and the process is not that complicated. If you follow these 5 simple tips, you may get from bad credit to excellent credit in due time.

1. Check Your Credit Report

First things first - you need to know where you are now in terms of your credit score. Start by checking your credit reports and credit scores with the three major credit reporting agencies - TransUnion, Equifax, and Experian. You are entitled to one free credit report from each of these three credit bureaus every year.

When you receive the copies of your credit reports, take note of the things that hurt your credit score such as late payments, delinquencies, debts in collection, accounts you do not recognize and other suspicious records. Be attentive - a credit report is not flawless, it just contains data used to calculate your credit score and it may contain errors. There even may be errors in your personal information. If you see an error, dispute it with credit bureaus and/or your issuing bank.

Analyze all negatives that hurt your credit score. Bear in mind that your credit score consists of several things that affect it to a different degree. Some things have more weight than the others. In this pie chart, you can see which things have the most impact.

2. Get Rid of Your Debt

If you've studied the chart thoroughly, you've probably noticed that credit utilization makes up a large portion of your credit score - specifically, 30%. It's almost a third of the whole thing! Credit utilization ratio is the amount of your balance divided by your credit limit. In other words, it's how much you owe. The more debt you have, the less likely you have a good credit score. The perfect utilization ratio should not be over 30%. So, how do you remove debt?

Pay more than the minimum payment. Paying the bare minimum each month lets you shake off the thought of your debt for another month without consuming a lot of resources, so in the short run it may seem like a good way. However, as the APR takes effect, the interest is added to your balance, enlarging it drastically. As a result, your balance grows like a snowball each month, and one day the interest may exceed your initial balance. However, you may easily prevent this if you pay more than the minimum each month and don't let the interest grow.

Pay off your worst credit card first.As we already established, your credit utilization is a proportion. So if you take out the most affecting part of this proportion, it'll change for the better. Try get the credit card with the most debt out of the way first, and your overall debt-to-credit ratio will lower. Besides, a large debt is likely to collect more interest.

3. Get a Secured Credit Card

With a bad credit score, you're likely to face a dilemma: you need a credit card to build credit, but banks won't approve you for a regular credit card with a bad credit score. But there's a way around that. Secured credit cards are meant for building credit and are very easy to use. For a secured card you'll need to pay a security deposit that is usually equal to your line of credit. That is, if you need to pay upfront $200, you'll have a credit limit of $200, but once you close the card, you may get your deposit back. Some secured credit cards can even be upgraded to an unsecured account. Not very attractive? Consider this not a real credit card, but a tool to improve your credit. Below you can see and compare a range of secured credit cards and choose the one for you.

our choice

Regular APR
19.24% (V)
Annual Fee
$39.00
Credit Check
No
Credit Bureau Reporting
Yes
  • Earn 1% Cash Back Rewards on payments made to your First Latitude Secured credit card account.
  • Past credit issues shouldn’t prevent you from getting a credit card with great benefits & rewards!
  • Choose your own fully-refundable credit line - $200 to $2000 – based on your security deposit.
  • Build or rebuild your credit!1
  • Accepted wherever Mastercard® is accepted
  • Reports to all 3 credit bureaus
  • No minimum credit score required for approval!
  • 1Cardholders who keep their balance low and pay their credit card bill on time every month typically do see an increase in their credit score.
  • *See Important Disclosures for complete offer details

our choice

Rewards

Earn 1% Cash Back Rewards on payments made to your First Latitude Secured credit card account.

Reporting to the Major Consumer Reporting Agencies

No Credit Check

Secured Credit Card

our choice

Regular APR
25.64% (variable)
Annual Fee
$35
Credit Check
No
Credit Bureau Reporting
Yes
  • New feature! Earn up to 10% cash back on everyday purchases
  • No credit check to apply. Zero credit risk to apply!
  • Looking to build or rebuild your credit? 2 out of 3 OpenSky cardholders increase their credit score by an average of 41 points in just 3 months
  • Get free monthly access to your FICO score in our mobile application
  • Build your credit history across 3 major credit reporting agencies: Experian, Equifax, and TransUnion
  • Add to your mobile wallet and make purchases using Apple Pay, Samsung Pay and Google Pay
  • Fund your card with a low $200 refundable security deposit to get a $200 credit line
  • Apply in less than 5 minutes with our mobile first application
  • Choose the due date that fits your schedule with flexible payment dates
  • Fund your security deposit over 60 days with the option to make partial payments
  • Over 1.4 Million Cardholders Have Used OpenSky Secured Credit Card To Improve Their Credit

our choice

Rewards

New feature! Earn up to 10% cash back on everyday purchases

Reporting to the Major Consumer Reporting Agencies

No Credit Check

Secured Credit Card

our choice

Regular APR
9.99% Fixed
Annual Fee
$48
Credit Check
No
Credit Bureau Reporting
Yes
  • Better than Prepaid…Go with a Secured Card! Load One Time - Keep On Using
  • Absolutely No Credit Check or Minimum Credit Score Required
  • Automatic Reporting to All Three National Credit Bureaus
  • 9.99% Low Fixed APR - Your Rate Won’t Go Up Even if You Are Late
  • Activate Today with a $200 Minimum Deposit - Maximum $1,000.
  • Increase Your Credit Limit up to $5,000 by Adding Additional Deposits Anytime

our choice

Instant Response

Reporting to the Major Consumer Reporting Agencies

No Credit Check

Secured Credit Card

our choice

Regular APR
25.24% (V)
Annual Fee
$29
Credit Check
No
Credit Bureau Reporting
Yes
  • Choose your own credit line - $200 to $2000 – based on your security deposit
  • Build your credit score.1 Reports to all 3 credit bureaus
  • No minimum credit score required for approval!
  • 1Cardholders who keep their balance low and pay their credit card bill on time every month typically do see an increase in their credit score.

our choice

Reporting to the Major Consumer Reporting Agencies

No Credit Check

Secured Credit Card

Build Credit

our choice

Regular APR
19.24% (V)
Annual Fee
$39
Credit Check
No
Credit Bureau Reporting
Yes
  • 1% Cash Back Rewards on payments
  • Choose your own credit line - $200 to $2000 – based on your security deposit
  • Build your credit score.1 Reports to all 3 credit bureaus
  • No minimum credit score required for approval!
  • 1Cardholders who keep their balance low and pay their credit card bill on time every month typically do see an increase in their credit score.

our choice

Rewards

1% Cash Back Rewards on payments

Reporting to the Major Consumer Reporting Agencies

No Credit Check

Secured Credit Card

4. Avoid carrying balance

Remember the pie chart? The second thing that affects your credit severely is your payment history. It takes 35% of the whole. Payment history is the information on how you pay all your bills and if you pay them on time. Until you reach at least fair credit, consider all your credit cards just means of showing credit bureaus and credit card issuers that you are a responsible consumer. You need to lead an exemplary financial life without any mistakes.

The most important thing is once you've dealt with the old debt, don't accrue the new one. Never carry a balance on any of your credit cards. Pay off all of the balance by the due date each month. Never be late with your payments, because that way you'll lose a lot of points and bring a late payment fee on yourself. To make things easier for yourself, you may just charge a small amount each month and pay it off at once. Try to carry this style into your future life - even when you improve your credit you'll gain a lot from your habit of not carrying your balance from month to month and escape a lot of problems. And while your credit is far from perfect, this is crucial.

5. Upgrade to an Unsecured Card

As soon as you are free of your debt and have improved your credit score, you can breathe a sigh of relief and move on to better opportunities. If you have a secured card of one of major banks, you may ask for an upgrade to a regular card. Or you can just choose another regular card for bad credit that won't make you pay a deposit. Here are some of our picks:

Apply for Surge® Platinum Mastercard® - Credit-Land.com

Rating 3.7

APPLY NOW

Bad, Fair, Good, Excellent Credit

our choice

Regular APR
29.99% (Variable)
Annual Fee
$75 - $125, after that $99 - $125 annually
Credit Check
Yes
Credit Bureau Reporting
Yes
  • Up to $1,000 credit limit doubles up to $2,000! (Simply make your first 6 monthly minimum payments on time)
  • All credit types welcome to apply!
  • Monthly Credit Score – Sign up for electronic statements, and get your Vantage 3.0 Score Credit Score From Experian
  • Initial Credit Limit of $300 – $1,000 (subject to available credit)
  • Monthly reporting to the three major credit bureaus
  • See if you’re Pre-Qualified without impacting your credit score
  • Fast and easy application process; results in seconds
  • Online account access 24/7
  • Checking Account Required

our choice

Instant Response

Reporting to the Major Consumer Reporting Agencies

Unsecured Credit Card

Build Credit

Apply for Group One Platinum Card - Credit-Land.com

Rating 3.5

APPLY NOW

Damaged/Fair Credit

our choice

Regular APR
0%
Annual Fee
See website for Details*
Credit Check
No
Credit Bureau Reporting
No
  • No Employment or Credit Check
  • Bad Credit, No Credit? No Problem!
  • Fast and Easy Application
  • $750 Limit (Usable only at TheHorizonOutlet.com)

our choice

0% APR on Purchases

Intro APR on Purchases:
n/a

Ongoing APR on Purchases:
0%

Instant Response

No Credit Check

Apply for Reflex® Platinum Mastercard® - Credit-Land.com

Rating 3.7

APPLY NOW

Fair/Poor/Bad/Limited Credit

our choice

Regular APR
29.99% (Variable)
Annual Fee
See Terms*
Credit Check
Yes
Credit Bureau Reporting
Yes
  • Up to $1,000 credit limit doubles up to $2,000! (Simply make your first 6 monthly minimum payments on time)
  • See if you’re Pre-Qualified with no impact to your credit score
  • All credit types welcome to apply
  • Access to your Vantage 3.0 score from Experian (When you sign up for e-statements)
  • Initial Credit Limit of $300 – $1,000 (subject to available credit)
  • Monthly reporting to the three major credit bureaus
  • Fast and easy application process; results in seconds
  • Use your card at locations everywhere Mastercard® is accepted
  • Checking Account Required

our choice

Instant Response

Reporting to the Major Consumer Reporting Agencies

Unsecured Credit Card

Build Credit

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Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions. All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.

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