If you have a 500 credit score, your financial life is probably somewhat difficult. I personally know exactly what that’s like. You can’t buy a cell phone or satelite dish, let alone a nice vehicle or home. It’s embarrassing and it’s worth doing whatever it takes to improve the situation. I personally was able to dig out of the hole I created and you can too.

The first thing that you have to do if you find yourself in this situation is educating yourself on the process of recovery. This means that you will have to learn about the factors that have caused you to have bad credit.

Likely Causes of Bad Credit

There are a lot of things that are used to calculate a credit score, but a few of those things are the most likely culprits. I’ll focus on the most likely causes and you can check your own credit report to evaluate how they line up with your credit profile.

High revolving credit balances are one of the most likely causes of your low score. As soon as you have balances over 35% of your available credit, it will start to affect you negatively. The higher you allow your balances to get, the more it will affect your credit score. Paying those balances down will have a huge positive impact on your credit. For those of you who are unfamiliar with the terminology, revolving credit accounts are basically credit cards.

Late payments are also a killer and are high on the list of common issues causing bad credit. As soon as you have made a few payments that are 60+ days late, it’s really going to start affecting you. While you usually can’t undo that past, you can make up a lot of ground by making on-time payments. If you will commit now to never make another late payment, you’ll find that your credit score can start to improve within a few months.

My Personal Credit Turn-around

I personally went from having a credit score in the 500 range to having one in the 800 range. However, this doesn’t happen overnight. I didn’t make a late payment for years and years – I’d say I haven’t made a late payment in six or seven years. I now no longer have any late payments on my credit report. I also have balances that are very low on all of my credit card accounts.

In the past, I simply wasn’t responsible financially and I had to make a change. That change wasn’t easy to make. It was worth it. I don’t have to worry anymore about applying for any kind of loan.

If you are struggling to re-establish your credit, secured credit cards can really help. I personally used them before I could qualify for regular cards.

A new business has a lot of expenses, sometimes urgent. When the loan money is depleted many business owners are forced to use personal credit cards or checking accounts. This, however, isn’t great for the company’s credit history. A company needs credit history to gain better the best business credit card offers. Business credit cards have a lot of perks that normal credit cards don’t offer. There are many reasons to apply for an unsecured business credit card for your company.

1. Unlike secured credit cards, regular credit cards have lower interest rates, monthly and annual fees and higher limits.
2. A personal credit card may affect your credit positively, but it does nothing to strengthen the credit of your company. A good credit history is vital for a growing company; especially one that may need an influx of cash for expansion at some point.
3. A business credit card can be issued to numerous employees, making buying company paper, ink, pens etc convenient. It’s especially convenient for a partnership company. As the cards are issued under certain names or numbers, the purchase trails are accountable individually.
4. Business reward credit cards are amazingly beneficial to a company. A business owner can usually choose which rewards work best for their company, including: mileage bonuses, cash back and discount with restaurants (for bromancing clients) etc.

Finding the best unsecured business credit card isn’t as easy as it should be. Searching in Google can take ages if you want to wade through page after page of offers. The best option for a new company is to decide what type of credit card will work best for their company. This means deciding an interest rate you’re willing to settle for, what type of annual fee is acceptable (this is sometimes deductible), rewards vs. fees (chances are that if you have a ‘rewards’ card, there is an annual fee).

It’s easier to find a business credit if you’re looking for a certain type of reward card, for example. It’s simply a matter of searching for “business card reward airline miles” or something similar. Remember when searching the Internet that most websites have an interest in giving you the names of credit card companies they’re affiliated with (meaning they get a fee for referring you). While the companies they recommend may have fantastic offers, they aren’t a comprehensive list.

In the end, the best business credit card offers are probably going to be through your lender. Why? Because they want your full relationship and they’ll compromise to get it. Don’t be afraid to ask for exactly what you want from your lender. It can sometimes be most beneficial to have one of every type of account with this lender. This doesn’t mean you have to close other accounts, by the way. Considering the vast discounts available for having a full relationship with a lender (checking account, business account, credit card etc.), it’s worth asking what is available.

Good luck with your new business!

Sometimes I feel as though my body is hardwired to accept any and all credit card offers I find in the mail (or in magazines, newspapers, online etc). It’s a dangerous habit that my husband has, quite frequently, railed against. When at one point I had over five cards, three of which were maxed, he put his foot down. Last year he spent some time researching how to eliminate credit card debt. We paid off the four highest balance/interest cards and closed them out. In the end it was a good decision. Reducing the amount of credit cards we had pushed not only improved our cash on hand, but our credit score from 600 to nearly 715 (almost perfect credit). Pushing our credit rating up allowed us to refinance our mortgage and car loans. We reduced our monthly payments, and the total interest, significantly.

Credit card debt can be extremely easy to overlook. After all, one only has to pay the minimum, which never seems like much. That new fifty inch television is only costing you thirty bucks a month (and another thousand dollars in interest by the time it’s paid off). Knowing what you’ll pay in interest rate charges may convince you to eliminate credit card debt. However, I’m more convinced that knowing all the extra goodies that come with consolidating and/or legally eliminating credit card debt will be the ultimate persuasion.

Credit card debt is one of the easiest credit problems to fix. Why? Because you have numerous choices in order to do so. Consolidation companies can reduce the total interest paid across the board and create a single payment (however, they cannot help with mortgage or car loan debt). Credit cards have minimum payments and those go down as you pay off the balance. That means there is incentive to lowering the balance (more cash in pocket). Lastly, credit cards can be opened and closed relatively easily, giving opportunities to do balance transfers to lower interest rate cards. So while there are plenty of ways to eliminate or reduce credit card debt, what you’re asking yourself is: how did WE eliminate ours?

We did a rolling credit card debt elimination trick. We had five cards that we wished to get rid of, all of these belonging to me. Of the five cards we picked the ones with the highest interest rates and balance. This was our go-to card, meaning every extra payment we had went to this card, plus the minimum. The rest of the cards only had the minimum payments made. When that card was paid off, we took the used the amount we had been paying ($150 extra + $46 minimum) and applied that to the next card (plus the minimum). Each card was closed upon balance-in-full-payment. This is, in my opinion, the best way to eliminate credit card debt, legally and inexpensively. You could pay the extra money to a consolidation firm, they will, of course, work out better terms with your credit card companies. On the other hand that also has a negative impact on your credit report.

Rolling credit card debt payments is the cheapest, safest and most convenient way to eliminate credit card debt, in my opinion.

About ten years ago, I started collecting credit cards like they were valuable stamps. It didn’t take long to get in over my head. With several credit cards at max balance and the minimum monthly payments it didn’t take long until I was behind on payments. At this point, like many other people, desperation clicks in and one starts looking for credit card debt consolidation companies. While many of these companies are worthwhile, the process can be expensive (even with non-profits), and sometimes can lower a credit score. There are a lot of good things about a credit consolidation company, however.

Firstly, consolidation companies usually combine all the debt and the borrower pays them a set amount every month. The company then disperses the cash among the lenders. Having the convenience of paying all the bills to one spot is very helpful when you’re overwhelmed with bills and due dates and minimum payments.
The second bonus of using debt consolidation companies is having them work out deals with creditors. The most important bonus, actually, is their ability to reduce interest rates and even, sometimes, the total balance due.

There are a lot of negatives to working with companies that do debt consolidation. It’s important to be aware of them before you make the decision to use them.
Once you accept the company’s terms, you’ll be cutting up your credit cards and closing the accounts as they’re paid off. I have yet to find a consolidation company that allows any credit, in any form, to be kept or applied for during the course of the consolidation.

If you have anything other than revolving credit; i.e. bad checks, mortgages, car loans etc., they aren’t included in the consolidation. This means you’ll have to make those payments separately.

Hidden into some of the terms and agreements at many consolidation companies is a provision to make a “voluntary extra payment”. Be aware this isn’t a necessary payment and you should request anything like it to be removed from the contract, or go through a different company.
Consolidation through a firm isn’t the only option for someone with credit problems. A borrower can actually arrange to lower interest rates and make deals with creditors to pay off an account. A specific company is not always necessary.

There are also ways to pay off debt quickly and efficiently without consolidation; i.e. a rolling payment plan. in this type of payment plan you make the maximum extra payment to one particular card until it’s paid off (paying the minimum on others). Once it’s paid off you take all the money (including the minimum payment) and apply that to the next card. You’ll always pay the same amount total, but each card will get a different appropriation of the funds depending on if they’re at the top of the list to pay off. Once you pay off one card, it’s exhilarating enough to usually spur higher payments to the next.

The population of the United States is around 300,000,000 people. Why is this important in the discussion of how to get a mortgage with bad credit? Bad credit is embarrassing! It helps to know that of the 300,000,000 people in the USA, 110,000,000 of them have suffered bad credit. Yes, that’s around one third of the population! There isn’t any reason to feel overwhelmed by bad credit in today’s society. In fact, the sheer number of people with bad credit actually works in your favor. If you’re searching for how to get approved for a mortgage with bad credit, you’ll find there are hundreds of options – if there wasn’t, around 110,000,000 Americans would be unable to buy a home. As such the credit industry has had to make allowances.

So how do you get a mortgage with bad credit history? Just doing a simple search on the Internet will garner hundreds of lenders willing to accept your application. But there are implications to applying to different lenders, not the least of which is your credit score being lowered further. In order to get a mortgage loan with bad credit, there are some guidelines to follow.

1. Get a credit report, and not the free kind! Your credit report reveals a lot about your credit history, some even incorrect. The free kind gives you all the information about your debt history, but a paid version includes a FICO score. The FICO score is the magic number that accounts for some 80-90% of the mortgage loan decision.
The scores range from 350 (awful/terribad) to 950 (superduperawesome). If your score is 350-499, you’re better off moving home with mom, rather than getting a mortgage loan. Even at 500-619, your credit score is so poor you can end up with $200,000 extra interest paid.

Knowing your credit score will allow you to visit lender websites and see what you’ll qualify for in terms of their interest rates. Most lenders have this information prominently displayed (and most of the time it’s a scary thought to get a home loan with 20% interest rates).

2. Review your credit report for errors. If you find erroneous entries, follow the instructions with the reporting agency to dispute the transaction. Every entry affects your credit in a different way. Removing even one bad credit entry can raise your credit score 50 points (lowering the bad credit interest offering by as much as .05%, which can be $50,000 in interest).

3. Configure you debt to income ratio. Excluding utilities, create a ratio of your total monthly debt divided by your total gross monthly income. If this figure is above 36%, you’re in the nono area of credit risks. Ideally you want this score to be around 28%. Pay off and close low limit credit cards, wait to apply for a mortgage loan until you have a chance to reduce your debt to income ratio.

4. Learn about the different types of loans and which are beneficial in your situation. Check into the terms “ARM” “FIXED INTEREST RATES” and other terminology. There are literally hundreds of ways a mortgage loan can work and sometimes getting a bad credit mortgage loan will be approved with only fixed or ARM rates. Each lender has their own standards.

Understanding how to get a mortgage loan with bad credit will, I hope, make you consider repairing your credit before the application process begins. Repairing credit is fairly easy and very productive. A year of secured card payments may save you thousands of dollars, as will reducing your debt to income ratio.

Not long ago I posted an article on how to eliminate credit card debt. While eliminating credit card debt was my ultimate goal (because, well, I had more than five cards open (not including my husband’s), perhaps other people wish to only lower credit card debt. Lowering credit card debt is important, not only because of the interest and payments that can pile up, but because too much debt negatively affects your credit score. When your credit score lowers, lenders can raise mortgage or car loan rates.
There are sometimes clauses in your mortgage or car loan agreements which allow the lenders to run your credit report at certain times. If your credit score is lowered, they can up your interest rates (they can lower them too, but hey, that’s about as likely as health insurance companies lowering premiums). If that isn’t incentive to keep an active eye on your credit reports, credit card debt and debt to income ratio, I don’t know what is.

Lowering credit card debt isn’t difficult. There are several ways to do it, some expensive, some cheap and some free. Consolidation services are perhaps the most expensive, although not overly so if you go with a not for profit organization. Keep in mind that not for profit does not mean inexpensive in every case! Check what the charges are before you engage in the contract. Oftentimes there is a buried paragraph in the contract which states that you will make one whole monthly payment as a “voluntary” contribution to the company. That’s sort of like baking a hundred cupcakes for a church bake sale only to learn a ten of them are going directly into the mouth of the organist, for free! Request a total amount of fees be stated up front and that you are not making any “voluntary” extra payments (or involuntary, for that matter).

It’s not necessary to lower credit card debt using a consolidation firm. You can negotiate terms with credit card lenders on your own. Simply call the lender and request a lower interest rate. It’s not always fruitful, but neither is opening oysters for pearls. You’d still open one if you the opportunity presented itself, right? Present your own opportunity, call your credit card lender and ask for better terms.

Lastly, there is a great way to lower credit card debt with no cost, it’s what is called a rolling credit card pay off. Make the minimum payment on all your credit cards except one, the highest interest/balance card. On that card make the minimum payment plus any extra you can afford (say $100). So now you’re making around $143 payments to the card (remember, you’re including the minimum). When that one is paid off you carry that $143 over to the next card plus that minimum payment. The next card would get a payment of $173 every month, for example, until it was paid off. Never reduce the amount of the payment, even if the minimum goes down. You’ll eventually have all your cards paid off (close them out if they have low limits by the way!), giving your credit score a boost and allowing you to refinance your home and car at lower rates.

Ever wonder why credit cards for people with a poor credit rating are so important? Bad credit is like a poor guest that arrives in your house, eats all your food, gives you a cold and then invites itself over the next day to start the cycle all over again. Once it infects you, it spreads and touches everything near you; your home, your car, your future. The terrible thing is that ninety percent of people that have a poor credit rating, didn’t invite this terrible guest into their home; the guest just arrived, with little or no warning bearing gifts of late notices and collection calls.

For most people, bad credit is a slow winding road that needs to be carefully maneuvered through. The road is dusty and hard to navigate, but eventually, if you follow the right road signs you’ll get to the main road.

For other people, bad credit is a roller coaster with no brakes. The hills are steep climbs and when you get to the top, you have a moment’s breath before plunging into stomach churning depths. Weeks before the bill comes you wait with trepidation, trying to scrape together money to pay it. You finally get enough to make that minimum payment, barely, and breathe easier until the next month. Meanwhile, the roller coaster has added a new twist; another bill, which you’re unable to pay.
Eventually, when the roller coaster stops and you’re wobbling off the platform of paid bills and past due notices, the amusement park that is your life, hands you a credit report which has you thinking something along the lines of “wow, I didn’t know you could get negative credit”. Cheer up because you may be off the rollercoaster, but the fun is only starting.

All those past due bills, which took you months to pay off, are now showing on your credit report. The mortgage company has decided to up your interest because they ran your credit report and decided you’re a bigger risk than before. Your car lender soon follows suit. And now that poor houseguest has moved in and made itself at home.

Credit cards for poor credit rating borrowers are one of the best ways to make that poor credit houseguest move out. How does having a credit card with a poor credit rating help? Well you need to show those nasty credit report people (who, by the way, sent you that terrible guest) that you can make payments in a timely manner. A credit card is the best way to do that because it’s a revolving account. This means you can pay it off, use it again, pay it off, use it again…and all of that payment history goes on your credit report.

Stop bad credit from ruining your life. Once you’ve caught up on your bills, try and get a secured credit card. It will go a long way into showing creditors you’re a worthwhile candidate for loans and low interest rates.

The best consumer credit cards are not always given to the people with the best credit. I know that’s shocking right? But it’s very true. Credit card companies look at the value of the consumer and their credit history to judge which offers they send out. Don’t get me wrong, good credit is absolutely vital, but having a 950 credit score doesn’t automatically garner a consumer credit card with the best features.

A credit card company makes money on customers that carry balances over. If you’re a consumer that pays their bills every month on time and in full, leaving no revolving balance, you’ll have a stellar credit report, but you may not be offered the best credit cards available. A smart lender will send you a card with an annual fee and 0% interest rate, they may even tack on extra fees that accrue annually. A person that has a lower credit score, but still good (say in the 650-720 range), that keeps a rolling balance on a credit card will probably get a card that has 0% interest, no annual fees and probably gives miles and/or points to use at various merchants.

So why would a person with worse credit get a better deal? Credit card companies make money from interest payments and annual fees. If a consumer has very poor credit, they’re offered the high interest, high annual fee cards. A different consumer with good credit, but pays the entire balance every month, would be offered a card with 0% interest but an annual fee. Yet another type of consumer has great credit and pays the minimum payment or a little more every month. This last consumer is the ideal customer that every bank wants to keep. (Notice I used the word “offered”, because a consumer can always request a better deal).

Consumer credit cards applications are sent out to customers based on their credit history, but not necessarily the credit score. Unlike a mortgage or car loan, the credit score is not the most important factor in getting better card offers. If you receive an offer in the mail and it says “0% interest”, check the fine print for fees. If you have great credit, don’t be afraid to ask for the exact card you want. Get a card that accrues miles and points with purchase, but has no annual fee. Seek out the lowest interest rate possible. However, do not apply for several cards. Every application for credit lowers your credit score. A simple request for the credit card application of your choice with different lenders will let you read over the details of the card terms and conditions, allowing you to decide which card works for your lifestyle.