Having a low credit score can really put a damper on your finances. You can't get approved for car loans, mortgage loans, or credit cards. Pulling your credit score up after a financial setback can be extremely hard. It is very easy for your credit score to drop significantly, but working to get that number back up is a process. So what are some solutions for people with a low credit score, and what can they do to help give their score a boost?
Consider personal bankruptcy
Usually the worst case scenario for a person is to file for bankruptcy, and it is true. It is something you'll want to avoid unless you are in the most vulnerable financial debt that you cannot get out of. If you are hundreds of dollars in debt, it might be beneficial to talk with a bankruptcy lawyer. Make sure you look for a reputable lawyer who isn't just trying to make money off of you, and can give you genuine, helpful information about whether filing for bankruptcy is the best option for you. Keep in mind, that if you have a lot of student loan debt, this will not be wiped away if you file for bankruptcy. Many students come out college with a poor credit score and they don't understand why. It can be due to student loan debt, accumulated over the years. As long as you continue to pay the loans back on time, your credit score will improve.
Get a secured credit card
You might be in debt and have a low credit score because of past use with credit cards. First work on paying back your debt, without spending on the credit card. Instead, apply for a secured credit card. Most people with poor credit scores are approved, but in order to receive the card, you must pay a deposit. The deposit amount you pay is based on your current credit score. For example, Capital One offers a secured credit card where you might pay as little as a $40 deposit for a $200 line of credit, or pay the full deposit of $200 for a $200 line of credit. These types of credit cards really help to boost your credit score, and Capital One has one of the best options, with great reviews. Be sure to keep your utilization down on your secured credit card, because this can drop your credit score a couple of points.
Short term loan options
Short term loans can help you to pay bills on time, and avoid late fees, which a lot of times are sent to one of the three credit bureaus, and can negatively impact your credit score. Lendup is a great option for short term loans, especially if you have a low credit score. Simply submit an application, and proof of income, and you can get a small loan of $150 to $250. The company will usually give you a month, and they will automatically remove the funds from your bank account on the due date. Lendup will report to the credit bureaus if you continue to take out loans with the company (and of course pay your loan back on time).
There is always a way to improve your credit score, and it is something you should be mindful of, especially if you want a strong financial future, complete with a great credit rating!