By 
With thousands of people each year becoming bankrupt or suffering from spiralling credit card debt, many people are unfortunately falling into the realm of bad credit.
Having a bad credit rating is not necessarily the end of the world, and there are ways in which you can rebuild your credit rating to prove that you are once again on the right financial track. Let our financial expert guide help.
Know how bad the situation is
Before you can start trying to recover your bad credit, you have to know how bad the situation is. You can do this by checking your credit score via a reputable credit bureau, such as Experian or Equifax.
Once you receive your credit report, you should look at the major hindrances so that you know where you have gone wrong.
You should also look for any mistakes that might be on your credit file. If you find any mistakes that are making your credit score seem worse than it actually is, you can contact the credit bureau and ask for the information to be removed from your file.
Start the rebuilding process
Once you know your actual credit situation you have to create a plan of how you want to rebuild your rating so that it’s at an acceptable level. You have to start slow as nobody is going to give you a lot of credit if they think you are untrustworthy.
Use a bad-credit credit card
One of the more popular ways to start rebuilding a credit rating is to use credit cards for bad credit. The main purpose of a bad-credit credit card is to help someone to start or rebuild their credit score.
The main benefit of a bad-credit credit card is that it gives you the opportunity to prove to lenders that you can be sensible with your spending, and that you can handle debts and subsequent repayments.
The best way to rebuild your credit score slowly is to repay the balance of your bad-credit credit card in full each month. You then demonstrate that you are trustworthy and that you can be responsible with your spending.
The negatives of a bad-credit credit card
The main negative of a bad-credit credit card is the rate of interest as the APR (annual percentage rate) is significantly higher than that of a normal credit card.
It’s important to remember that these cards are only supposed to be used for the purpose of rebuilding or building your credit score, so you shouldn’t borrow significant amounts of money unless you can pay the balance off in full at the end of the month.
You should certainly not consider using credit to help build your investment portfolio. Investing should be made from cash savings.
