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How to improve poor credit history

Having a bad credit history can pose a lot of problems. You will face difficulty in applying for every kind of loan be it a house loan, car or business loan. But you can improve your credit history.  There are just a few steps you need to follow to improve your credit history.

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Identify your credit score

First of all, you need to classify your credit score and limit. You can get your score from the credit report. Analyze it and identify where you are lacking. Try to overcome all the flaws carefully. You can also get help from credit monitoring services that assist and guide you to identify and improve your credit history. But you cannot improve your score unless you have not borrowed money. There are a few options in the market that can help a person with bad credit history obtaining credit.

Sort out the kind of credit you require

Firstly, find out what type of debt you need. If you want a loan, you can apply for bad credit loans. But if you want a credit card, you need to review credit card promotions. You can either apply for a secured or unsecured credit card. Secured credit cards, in comparison to the unsecured credit cards, require you to put some money as security in case you are unable to pay back. The amount you give as collateral usually determines your credit limit. These credit cards best fit the needs of a person with poor credit history. You can also qualify for the unsecured credit cards but they usually come with higher annual fees, higher APR and less credit limit as compared to the secured ones. You should not apply for credit cards that offer cash discounts or other rewards as they offer higher APR.

Make monthly payments in time and never exceed the limit

Paying your bills in time and staying within the credit limit is a crucial step in improving the credit history. Do not miss it. Once you have applied for the secured credit card, make sure to pay your credit card bills in full every month. Set reminders or automatic payment arrangements with your company if you are bad with making payment when it comes due.  With time you will start improving your credit history and be able to apply for the unsecured credit card. The money you gave as security will also be returned to you once you start developing a pattern of timely payments.

Maintain the achieved score

You also need to check your monthly credit score to identify how your payments are affecting the score. Once you have qualified for the unsecured credit card, again assess your needs, review credit card promotions and select the one that matches your needs. Remember, improving credit history is a long term process. It is not admissible that you start spending without any need and end up with delay payments. You must make it a habit to pay in time to maintain your achieved score.

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