Did The Pandemic Ruin Your Credit? Fast Ways To Rebuild Credit (2024)

2020/2021 has been hard on many people. And their credit has unfortunately suffered once all the mandates in place to protect slow payments were lifted. Now many consumers who have never had any credit problems must now navigate the world of subprime lending and look for ways to rebuild their credit.

Three Tools Used To Rebuild Credit Fast

Many consumers today are wondering which credit card for bad credit is superior over the other. And which can get them back on the road to good credit as quickly as possible.

There are 3 main financial tools used to improve credit.

• secured credit cards – preferred by many credit repair specialists
• unsecured bad credit cards – good for people who don’t have the security deposit required to obtain a secured credit card
• credit builder loan – Secured installment loans that will report to the credit reporting agencies.

How Secured Credit Cards Will Rebuild Your Credit

Secured credit cards are credit cards that require a security deposit. That security deposit will often be your credit limit. Although there are some secured credit cards that are now offering double your deposit as a limit. (You can find these cards on our secured credit card page)

Things to know about secured credit cards

• Guaranteed approval – as long as you can put down the security deposit you will be approved
• Security deposits can run between $200-$5000
• Most have very low interest rates – you will have to do your research before applying. But we have some secured credit cards on our resource page that have interest rates as low as 9.99% That’s lower than some good credit cards!
• Low fees- these cards will often have very low fees associated with them. In fact most will ONLY have an annual fee! These fees will range from $29-$59.
• Secured credit cards will generally convert to unsecured within a year. Which means that you will get your deposit sent back to you!

Your initial deposit serves two important functions. First, it serves as the basis for the spending limit that will be imposed on your card account. For instance, if you were asked to make a deposit of $800 then you can use as much as $800 on your secured line of credit.

Second, it guarantees the repayment of your future credit card charges. If you default on your secured credit card, your issuer can easily use the security deposit to payoff your unpaid charges.

How Unsecured Credit Cards For Bad Credit Can Help Fix Your Credit

Not all unsecured credit cards are the same. You MUST first make sure that you read their credit requirements before you apply. Keep in mind, that each time you apply for a credit card it will impact your credit score. When applying keep these 3 things in mind:

1. What is the credit score required to apply for the card
2. Make sure that somewhere on the application page it says “for bad credit”, bad credit O.K, rebuilds credit
3. if possible apply for credit cards that use a “soft pull” these soft inquiry credit cards will not impact your credit score when you apply

Things to know about unsecured credit cards for bad credit

• They tend to have low credit limits – usually $200-$500
• They will often have fees that they immediately place on the credit card which must be paid off first before you will gain full access to the credit limit. For example, they give you a $500 credit limit. When you get the card you will only have access to $350 because there is a $150 fee that has been charged to the card.
• You can pay off the card in monthly installments
• Great way for you to build credit without a security deposit
• Will generally always report to the 3 main credit reporting agencies – Experian, Equifax and TransUnion

How Credit Builder Loans Will Help You Rebuild Credit

Credit builder loans have rapidly increased in popularity over the last few years. These loans are great for adding an installment loan trade line to your credit report. This will add much needed diversity to your credit report. Many people only apply for bad credit credit cards. So that makes their credit reports “lopsided”.

You should have a good mix of credit cards, loans, and lines of credit to rebuild credit successfully.

What are credit builder loans and how do they work?

Credit builder loans are secured installment loans. They have a very easy approval process and the company we recommend, Credit Strong, doesn’t do a credit check. Each month they will report your payment which goes into a savings account. Once you have completely paid off the “loan” amount, you will be given access to the savings account minus fees.

Credit Builder Loan Process

1. Apply online.Takes about 5 mins
2. Open secured savings account
3. Make your monthly payments that include principal+interest
5. The principal is what you get back once the loan is paid off
6. The interest are the fees the bank charges for the account maintenanceand reporting.

Benefits of credit builder loans:

• Adds diversity to your credit report in the form of an installment loan
• Easy approval process since they are 100% secured
• Reports your payments monthly to the credit reporting agencies
• Not available in Vermont and Wisconsin. Vermont state law doesn’t allowed secured consumer lending and Wisconsin requires spousal consent for any consumer lending. Only 1 person can apply for a credit strong account and there are no exceptions, not even to add a spouse to the account.

How Guaranteed Approval Credit Cards For Bad Credit Can Help You Fix Your Credit

Guaranteed approval credit cards don’t require a security deposit and are often overlooked when it comes to rebuilding credit. But they are the EASIEST lines of credit to obtain! Here are some of the benefits of these cards:

• Most have no credit check
• They often give large lines of credit – which lets prospective lenders know you can handle large credit lines and helps meet comparable credit requirements
• Some of them appear as lines of credit on your credit report and not a credit card (adding to diversity)
• Will report to at least 1 major credit bureau

These instant approval credit cards will allow you to purchase merchandise from their catalog ONLY. You will not be able to use these like a VISA or Mastercard, and purchase items from any other store. Sometimes people call these store credit cards because of this restriction.

Conclusion: Tips To Remember When Rebuilding Your Credit

These four tools will help you to rebuild your credit. Just keep in mind the basic rules of improving your credit:

1. Always pay on time or before it’s due. It is up to you to make sure your payment reaches its destination on time. Utilize features like your banks bill pay
2. Keep your credit utilization low, under 30% of your credit line if possible
3. Diversify your credit. Do not only apply for credit cards.
4. Read credit requirements carefully before applying. Make sure your credit score falls within their requirements
5. Don’t apply for too much credit at one time. It is a big red flag to lenders that you maybe in a financial bind. It’s a bigger red flag when they see you are being declined by the companies you approach.
6. Make an effort to catch up on your past due payments. Negotiate with your creditors and make payment arrangements. Always ask if they would be willing to remove the negative information from your credit report. Some of them will and some won’t. But it never hurts to ask!

Here are some articles that can help you to rebuild your credit!

• What is a credit score and how is it calculated
• Can collection agencies take you to court over debt
• Helpful tips for debt settlement
• Understanding Your Rights Under The Fair Debt Collection Practices Act
• Fight back against abusive debt collectors