Recovering From a Poor Credit Score

Whether your poor credit score is caused by living beyond your means through overspending, or an unfortunate circumstance that made debt repayment difficult, your credit score can be repaired.

But bad credit scores weren’t earned overnight. Your credit score may have gradually fallen over a period of months or years until it dropped to a point where obtaining new credit or qualifying for fair credit terms became difficult.

Just as damaging your credit score was a gradual process, it will also take time to improve your credit score. It may take one or two years - or even more - depending on where your credit score is now and how much it needs to improve to be considered “good.”

Much of this will depend on how quickly you can pay back accounts in default, how high your balances are in relation to the credit limits and how quickly you can pay them down, and whether you keep current on all your active accounts.

A bankruptcy on your credit history will negatively affect your credit score for a period of seven to ten years depending on whether you filed Chapter 7 or Chapter 13.

But a fair to good credit score can be achieved even with a bankruptcy in your history, if you manage all your post-bankruptcy accounts well by keeping credit balances low and paying on time.

So, how you do begin to improve your credit score? Well, there is no single answer for everybody, it really depends on your personal situation.

If you currently have credit card and other loan accounts open, the best thing to do is work on making your payments on time, limit your unnecessary spending, and pay those account balances down.

Answer phone calls from creditors. It may be uncomfortable to talk when they are calling for their money, but speak with them to work out an agreement. If you work something out and keep to your agreement, your credit will suffer much less damage than if you ignored them.

If you have no credit accounts currently open but are plagued by bad credit choices from the past, consider opening new credit accounts to rebuild your credit history and improve your credit score.

It may be difficult to gain credit through traditional lenders, but you may find a fresh start with a card issuer who offers a sub-prime credit card. Just be sure to manage your new credit account responsibly or you’ll end up back where you started.

A secured card can be another option for a fresh-start credit card. Fees and interest rates on secured credit cards tend to be significantly lower than for a non-secured sub-prime credit card. Credit limits are generally equal to your deposit, and can range from several hundred to several thousand dollars.

No matter what, don’t give up and don’t get frustrated. It is a slow process to improve your credit score, but stick to your plan and you’ll see a gradual improvement over time. One day you’ll find that you qualify for a credit card with a low APR, no annual fee, and generous rewards.