Personal Finance Advice

If you have a low credit score, it may feel to you as though you’re stuck with this blemish forever. Even if you have made the effort to bring all your accounts to current status and have done every single thing you can think of to improve your score it can still take quite a bit of time for your credit score to reflect your hard work.

It can be a tedious task to build your credit rating back up after financial problems, and many people find themselves discouraged and ready to give up.

Here is what you need to know: It can be done.

A person with horrible credit is not doomed to have horrible credit forever unless he or she refuses to make an effort to correct past mistakes. Even the worst items on credit reports eventually fall off due to the number of years something can be reported to the credit bureaus, so in essence this makes the entire process boil down to a waiting game.

Suppose you get your first credit card when you are in your early twenties, and because you don’t have much experience with credit you allow payments to go late and you exceed your spending limit quite a few times. Then you get a couple more credit cards, and before you know if you’re a couple thousand dollars in debt and you have collectors calling you constantly. You change your phone number, chop up the credit cards, and pretend as though it all never happened.

Because they can’t contact you, the creditors charge off the debt and your credit report paints the picture of a person who is generally not trustworthy with debt. You have a low credit score, and there is no way any lender will extend credit to you.

A few years down the road you get to thinking that maybe this is something you should take care of. You contact the lenders and offer a settlement on the debt. Another year or so go by and you get your hands on a credit card with a high interest rate and low available balance. You pay this bill meticulously, and then eventually get a car loan at an embarrassingly high interest rate. You pay this bill meticulously too.

Years go by and you continue to pay your bills as scheduled, and you start getting offers for better credit cards and loans. Though it took some time and effort, by the time you hit your early thirties your credit score is great and you’re ready to get a mortgage loan at a premium rate.

Yes, it takes time to build your credit back up, but always keep this in mind: You are not stuck with your current credit score forever. If the thought of spending years correcting your past mistakes seems like too much effort, just ask a parent how quickly a few years go by. The parent will probably respond with this: “A few years can go by in the blink of an eye.”

If your credit is wrecked, start taking the small steps now to fix it. Years down the road when you can march into a bank and expect the best interest rate on a loan they have, you’ll thank yourself for putting forth the effort.