5 Best Products for Restoring Bad Credit

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We all stumble at times. Even the best people with the best intentions can face financial hardship. They might be unexpectedly laid off, or they might get into an accident and face a lot of medical bills. A divorce can also cause serious financial trouble. 

Whether you fall behind on your bills or you get in over your head with credit card use, your credit report will start taking a hit. Your score will fall, and you’ll have a hard time getting the credit that you need for bigger purchases like a car or a home. A poor credit score can even impact your ability to get a job or to take on a volunteer position.

Repairing your credit score is not just important for your financial future. It’s essential for your future success in multiple aspects of your life.Taking fast action can help you start turning things around now, such as by setting a strict budget and by paying as much as you can toward your revolving credit each month.

Some credit products are available that not only give you the money you need but also help you to repair your credit. Here are the top five products for restoring your credit:

Car Loan

You may find it very difficult to get an auto loan when your credit is floundering. Yet you can’t go without reliable transportation if you want to hold down a job (key to improving your credit).

Fortunately, plenty of dealers offer bad credit car loans that can help you get the car you need at an affordable price. McCluskey Automotive offers some of the best interest rates around for auto loans for bad credit. The loans have a low monthly payment, so you can start building a positive credit history with timely payments. 

By the time you’re done paying your car loan, your credit score will significantly improve (assuming you have no other negative marks against you in that time). We offer financing even for consumers with the worst credit.

Gas Card

Opening a credit card is a good way to build credit, but it can be hard to get a credit card when you have bad credit. A gas credit card is a more forgiving option. Since the limit on the card is so low, more people can be approved for it, even if they don’t have perfect credit.

Use the gas card to fill up your tank, and then put the cash you would have spent on gas toward your bill each month. This way, you don’t carry a balance but you do get credit for making on-time payments each month. Your credit score will slowly start to creep up, and you’ll become eligible for other types of credit, building on your success.

Just don’t let yourself get carried away with the card. Even if there is a low limit, a late payment or non-payment will count against your credit report all the same.

Secured Credit Card

If you aren’t interested in a gas card or you need a higher limit than what the card can offer, you should look into a secured credit card. Most credit cards are unsecured, meaning that if you don’t make the payment, the card company has no recourse against you. The only thing the company can do is report your non-payment to the credit bureaus. However, the company can’t seize any of your assets to pay the debt. That’s why you can’t be approved for most credit cards if you don’t have a good credit history.

A secured credit card requires that you put some collateral up for the credit. Typically, you have to make a cash deposit that is equal to the limit on the card. Therefore, if you have a $1,000 card limit, you should also have $1,000 in your savings account. If you default on the card, the company can seize the cash in your account to pay the balance.

Since companies have some recourse against you if you don’t pay a secured card, you are more likely to get approved for one even with bad credit. Start with your bank first. Most banks offer secured credit cards, and if you have been a long-time customer, you may have a little more clout.

Student Loan

Student loans have traditionally been easier to get than most other forms of credit. As a student, you aren’t expected to have a strong credit history. After all, you likely haven’t spent much time in the work force, and you likely don’t have much of a financial history.

Students loans are also considered “good credit.” They cannot be discharged except under extreme circumstances, and the government has recourse to go after your assets (including your paycheck) if you don’t pay. 

If you are attending college or are thinking about going back to school, consider taking out a small student loan to start building your credit. Even if you have everything paid for with a scholarship or your own savings, you might want to consider opening a small loan just for improving your credit. Keep the balance low — under $5,000 — and use it for textbooks or living expenses. If you have the savings or scholarship money to cover those expenses, just put it aside to pay back the loan later.

Consolidation Loan

Credit cards can easily overwhelm you with debt. Even if you have cards with low balances, the minimum payments on several cards can add up to quite a lot each month. Not only will you struggle to pay the minimum each month, but it will also take you much longer to pay off the credit cards, and you’ll end up spending thousands in interest. 

You can get your credit payments under control by getting a consolidation loan. You’ll be able to pay off all your credit cards, and then you’ll have one monthly payment for the loan. The interest rate will be lower, which will save you money, and you’ll be able to pay down your balances much more quickly, which will improve your credit. 

By moving all your debt to one loan, you’ll also improve your credit score. When you have multiple accounts open, that can lower your score. When you have multiple balances that are nearing the account limit, that can also lower your score. Moving your balances to a single consolidation loan can take care of both problems.

Even with the best financial planning, you might face some hardship that can make it harder for you to keep up with your bills or to become overly reliant on credit. But taking even small steps can help you to recover from the damage and start improving your credit score. Getting one of these credit products can help you make positive changes to your score while also getting the credit that you need.

 

Bad credit car loans are an especially important product. With these loans, you don’t have to wait until your credit is perfect again to get a quality car that you need for transportation. Visit McCluskey Automotive today to learn more about our auto loan for bad credit and to start restoring your credit today.