How to Repair Your Credit AND Still Live Your Life

Published on April 24th, 2019 by CreditFresh

Girl standing on a top of a mountain with hands raised to celebrate her achievement

People may tell you that you control your credit score, but if you have a low score it can feel like it’s actually in control of you and everything you do.

Sadly, when people stumble into problems with their finances, they suffer in silence. The stigma associated with money troubles can often lead to feelings of shame and embarrassment. In fact, 1 in 5 Americans admitted that they keep financial secrets from their own spouse. Another 1 in 5 said they don’t even share their salary.

Bad credit may keep you from getting the new car or the new home that you want. You may be scared to pick up your phone because you know it’s a creditor calling. You may not have a credit card anymore, making it more difficult to rent a car or book a hotel room. You may feel uncomfortable explaining to your friends why you can’t go away on the big weekend trip with them. All things considered, having bad credit can have a significant impact on your life.

But, you can recover! It’s important for you to know that, even though things may feel hopeless right now, you can still build a bright future for yourself. How does credit repair work, anyway?

There is no magic trick to recovering from a bad credit score. Your credit score is a complex and dynamic formula that is made up of a number of factors, so you have to do all the right things to build it up. How long does it take to repair credit? That depends on you, and how well you can stick to your plan.

Today we are going to talk about how to repair credit, and show you that there are ways to rebuild your credit and live your life. It won’t always be easy (if it was, everyone would have good credit), but if you follow these steps, you can give yourself the opportunity to make steady progress and hopefully recover faster than you think.

Set a Budget and Stick to it

Balance sheet with a calculator and pen

If you’re wondering how to repair credit, it all starts here.

Living on a budget isn’t the end of your social life, it’s taking control of it. If you shift your thinking and look at your budget as an opportunity to take control (rather than seeing it as taking things away), you can really embrace this new way of living and get the maximum benefit.

A budget forces you to sit down and look at the big picture of your financial life. You can immediately start to see where you may be wasting money. You may realize that you don’t need an expensive gym membership when you already have access to your condo gym, or maybe you didn’t realize how much those lunch outings you’ve been taking cost you. Whatever your indulgences are, having more insight into your finances can help you determine where you should be cutting back.

Little Big Expenses

Looking at your spending habits will help you identify the “little” expenses and the small charges (most often subscriptions) that can add up to a big number.

If we asked you how much money you’re spending on subscriptions every month, what would you say? A Spotify account here, an Amazon Prime account there; how much does that all add up to?

Researchers recently gave 2,500 Americans 10 seconds to think about all of their subscriptions and estimate how much they spend every month. The average answer was $79.74. But, when they had more time to add things up, it turns out the average total was actually $111.61, 40% more than their initial estimate.

Sit down and create a thorough and thoughtful budget. using your bank statements from the last few months. This should give you visibility into all of these little $9.99 and $12.99 monthly charges that make your income mysteriously disappear each month.

Plan the Work and Work the Plan

When you’re in the early stages of learning how to repair credit, sticking to your budget will be crucial. There are a number of amazing and free online tools you can use to put your budget together, such as:

One of the best ways of making sure that you stick to your budget is making sure you always have access to it. Put your budget on your mobile phone and stay on top of your spending with mobile apps like:

Keeping your budget on your phone keeps you accountable to your goals. It also helps you keep track of impulse buys and know what type of impact these buys will have on the rest of the week.

Prepare for Life’s Surprise Expenses

Person looking under the hood of a car to avoid repair expenses

Experts say we should all save 2-6 months worth of living expenses in case of an emergency, and a lot of people roll their eyes at that. Putting that much money away may not seem possible when you’re living paycheck to paycheck.

A recent survey revealed that nearly half of all Americans would not be prepared to deal with a sudden $400.00 expense. But emergencies happen whether we’re financially prepared or not. So how does one prepare for these emergencies while you’re rebuilding your credit?

A Line of Credit for Emergencies

A line of credit, such as a CreditFresh Line of Credit by CBW Bank, can act as the safety net you need. When life’s costly little surprises pop up from out of nowhere, you have a line of credit to deal with them, instead of having to make tough choices elsewhere.

Your line of credit is revolving credit, which means you are free to borrow and pay back on an ongoing basis. This is different from a personal loan like an installment loan, which gives you a lump sum and you pay it all back on scheduled payments.

For example, you could have a line of credit for $2,000.00. But, you’re only going to have to pay back what you actually use. If you only use $300.00, that’s all you will have to pay back. You don’t have to use any of it until you need it. It can sit untouched for a few months, ready for when you need it for those surprise expenses.

But how does a line of credit affect your credit score? That depends on how you use it.

Can I Get a Line of Credit With Damaged Credit?

You may have a hard time getting a line of credit through a major bank if you’re rebuilding your credit. However, you may qualify for a CreditFresh Line of Credit. The application process is also done 100% online, with no need to bring a pile of your financial statements all the way to the bank.

The process is simple and you may have an offer in a matter of minutes.

Step 1: Check Your Eligibility
Start by answering a couple of questions online in a few quick minutes. There is no negative impact on your credit score, as we will only run a “soft check” on your credit. More on that in the next section.

Step 2: Accept Your Offer
If eligible, simply choose your credit limit. You may then securely verify your details, and review and sign your agreement.

Step 3: Get Your Funds
The money may be drawn into your bank account as soon as the next business day.

What is a Hard Credit Check vs a Soft Credit Check?

Most major banks run a “hard check” on your credit, which must be authorized by you. Their inquiry shows up on your credit report and could actually lower your credit score slightly. When you’re looking to rebuild your credit, you will want to avoid this as much as possible. A few different hard checks over a short period of time may tell lenders you’re a lending risk.

However, a soft check does not lower your score because it’s more like a background check. You do not need to authorize them, they’re not recorded, and they won’t hurt your credit standing.

Because you don’t need to authorize a soft check, it may be done by a potential employer when you apply for a new job. Credit card companies may also run them before they offer you a specific promotion to make sure you qualify.

How Does a Line of Credit Affect Your Credit Score?

If your line of credit is kept in good standing (and your credit isn’t being hurt in any other areas) this may actually help your credit score. CreditFresh will actually report your payments to credit agencies. So, if you’re keeping a low balance and making timely payments, credit agencies will be informed and this can help you rebuild your score.

What does good standing mean? Financial experts disagree on the exact number, but it’s pretty safe to say you will want to keep your balance at 20% below your credit limit. The lower, the better. And of course, you need to make your payments on time or before the due dates.

Many financial experts advise people rebuilding credit to keep the line of credit active with a low balance. An inactive and unused line of credit likely won’t help your credit score. So, if you’re not “using it,” you might consider putting your gas purchases on your line of credit and paying them off a few days later.

Highligting definition of credit score with a green marker

Credit Cards For Damaged Credit

Yes, you can get a credit card with damaged credit. If you’ve had difficulty getting a standard credit card from a major company or a department store, you can still get all of the benefits from a secured credit card.

A secured credit card works exactly like a standard credit card. You can use it to confidently rent a car, book a hotel room, or shop online. You can use it to check out at the grocery store, in restaurants, or for cash advances at an ATM.

The key difference is you are providing funds (anywhere from $30.00- $1,000) in advance to secure the card and that advance acts as your available credit. If you pay $300.00, you now have access to a credit card with a $300.00 limit.

Secured Credit Cards and Responsible Credit Use

Obviously, this card still needs to be used responsibly, like your line of credit. The lower your balance, the better. You can also build your credit rating if you are making timely payments and keeping a low balance.

You might consider paying some of your regular bill payments or subscriptions on a secured credit card, and paying the balance down as quickly as possible. These payments and the low balance will be reported to credit agencies.

See How a Line of Credit May Help Your Situation

A CreditFresh Line of Credit by CBW Bank may act as a safety net. The process is simple, quick, and completely transparent, with clear terms and no unexpected or hidden fees.

You may receive a personal line of credit from $500 - $2,500. The application process will not negatively impact your credit report, and you can click here to get started.