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Surviving Bad Credit

Living with bad credit is a weighty burden, but it doesn’t have to devastate your financial future.

Yes, while high-interest rates on loans and credit cards are most likely inevitable if you have bad credit, getting loans for your first home or for a reliable car isn’t impossible. Also, once you’ve identified that you have bad credit, it’s never too late to slowly improve your credit.

There are a number of lenders who specialize in issuing loans to people who have less-than-ideal credit.

Depending on the severity of your bad-credit situation, you may want to look into an unsecured personal loan or a restricted credit card. Both these options come with high-interest rates, so make sure you’ll be able to make more than minimum payments, or you might be worse off than when you started.

There are several factors that make it difficult to secure a low-interest loan – for example, having a credit score of less than 580 or having recently filed for bankruptcy. But before you panic, sit down with a financial advisor and review your credit report. If your credit score is teetering between bad and terrible, a small loan might be what you need to lift you out of your credit basement.

Of course, the best option is to slowly chip away at improving your credit score. Bad credit is something that won’t disappear overnight, but if you devise a long-term plan to improve your credit, low-interest loans may still be in your near future.

Start by getting your credit cards under control. Typically, maxed-out credit cards have the greatest negative effect on credit scores. If you can get your credit cards under control – at least where you’re only using about 50 percent of your available credit – your credit score will experience a positive boost.

With a few deep breaths and some sound financial advice and planning, bad credit doesn’t have to ruin your financial future – hopefully, it’ll only be a hiccup on a long and prosperous road.