How to build your credit if you’ve got bad credit

Consumer Investigator Lauren Verno teamed up with Consumer Reports to find out the right way for you to boost or build your credit.

We all know our credit scores can impact our monthly bills; the lower our score, the more likely we are to pay more for everything from credit card interest to insurance premiums. It’s a problem millions of people have, credit scores so low, it makes it hard to qualify for a mortgage -- among other things.

“A bad credit history can also make it difficult to rent an apartment, go to college or even get a job,” said Consumer Reports Investigative Editor Lisa Gill.

Here’s the kicker: If you want to build up your credit, you need to get credit. But how can you get credit if you have bad credit?

Consumer Reports says first, you need to open a bank account, take out several small loans, and make on-time monthly payments -- which over time should improve your score.

Next, consider applying for what’s known as a secured credit card, which means that you’ve backed the card with cash. You can also ask a family member with good credit to add you to their credit card. Just make sure you have a good relationship with the person because if you miss or are late with a payment, it can ding both your scores.

And, if you have any outstanding debt in collection, pay it off as soon as possible. Make sure to pay all of your bills on time to avoid collections in the first place.

Consumer Reports says to be very wary of any quick fix credit services that offer help for a fee. You don’t have to pay to fix your credit. It just takes a solid financial plan and some time.

“Once you pay off any debt in collections, many credit-scoring systems won’t heavily weigh them when your score is calculated,” said Gill.

And finally, be sure to check your credit report carefully. You’re entitled to free weekly reports from the big three credit bureaus through April 2022. Dispute any errors you might find by sending a certified letter with evidence to Equifax, TransUnion and Experian. They have about 30 days to respond.