If you have a lot of debt, a debt consolidation loan can help you repair bad credit and establish a good credit history.
Before you apply for your debt consolidation loan, open a savings and a checking account, and keep some money in your accounts. Although bank accounts are not considered credit, and they won’t show up on your credit report, lenders view savings and checking accounts as signs of stability. Just be sure not to bounce any checks as that can have a seriously negative impact on your credit score.
Next, be sure to pay all of your bills on time, every time. On time payments to cable, hydro, and your internet service may not show up on your credit report, buy if you pay late, it probably will appear on your credit report.
Next, if you have had problems with credit in the past, get a department store credit card, or a secured credit card, since they are the easiest credit cards to get. Use the card for small purchases, and pay it off in full every month. Keep the credit limit small so you are not tempted to spend more than you can pay off at the end of the month.
Now that you have taken steps to build up your credit score, apply for a debt consolidation loan to improve your credit.
If you don’t qualify on your own, even after taking all of these steps, consider getting a co-signor if you need a little help; just be sure you can pay the loan back, or else your co-signor will be liable for the loan.
By improving your credit first, you improve your chances for getting a debt consolidation loan, and that’s a great way to improve your credit.
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