Bad Credit does often happen to good people and for a number of reasons. Whether you lost your job, had a medical illness that placed you in bankruptcy, went through a divorce or just simply mismanaged your money, you may now be finding yourself in deep financial trouble and a ruined credit history. The bad news is that you will need to work hard to improve your credit standings so you will be able to apply for credit with decent interest rates. The good news is that you can still apply for credit cards, personal loans, car loans and mortgage loans even with a damaged credit history.

How To Rebuild Your Credit

While you are rebuilding your credit history, it is best to use your credit wisely. Orchard bank and First Premier bank are sources of unsecured credit cards that will help you rebuild your credit history. The credit limits usually start out with $300 to $500 dollars in credit for these cards. Though the interest rate is between 19 and 29 percent for these cards, if you are trying to rebuild a damaged credit history, it is best that you get the card and use it wisely. Both these cards, as well as a number of other secured cards and prepaid cards, report monthly to the credit bureaus. Both Orchard ban credit card and First Premier credit card periodically review your account and increase your credit if you have a good payment history.

You should consider bankruptcy, if you are far too deep in credit woes to find your way out of it. In some cases, it may be better for you to suffer the damage to your credit and start fresh rather than suffer physically and mentally from debts that you have no way of paying back in your lifetime. You will have to speak with a qualified bankruptcy attorney to weigh your options.

Companies like Lexington Law Firm offer an option for those who want to repair their credit without having to file for bankruptcy. There is a monthly fee of about $40; however, many customers see great improvements in their credit history and credit score after allowing companies like Lexington Law Firm to represent them. After you send then copies of your credit reports, they take care of the rest.

Go over your credit card agreement and see if the credit card or mortgage companies violated your rights in any way. Some credit can be erased if the lender violated the "Truth In Lending" act in any way. It is generally good for you to obtain copies of your credit card agreements because it is good to know your obligations to each other. Many creditors are automatically moving to sue in small claims court as a scare tactic. If they win, they will have much more power over your finances than any external source should. They can freeze your bank account and put liens on your property so it is good for you to learn the debt laws in your state and read your credit card agreement in case you have to defend yourself in court.

You can try to repair your credit yourself by calling each of your creditors and setting up payment arrangements. Many times, you can do a better job than debt consolidation companies can and it does not cost you anything. Besides, by doing it yourself, you will understand just how you got yourself in this credit jam and it will deter you from getting into trouble again. If you want to try to deal with the companies yourself, then use the advice given to you by the Federal Trade Commission listed in the resources section. You can use a company like Lexington Law Firm to remove the information from your credit and couple that with sending the creditor a letter to "elect arbitration" in resolving any credit disputes. This way, the information comes off your credit report and the creditors cannot sue you in court. If they want to resolve the issue, they must arbitrate and pay the arbitration fees, resolve the debt on your terms, or write it off as a loss. Before you "elect arbitration," read your credit card agreement and make the terms are in your favor and that it will not cost you any monies other than your own lawyer and administrative fees-which, if you represent yourself-is nothing.

Where to Apply for Credit and Loans While you are Repairing Your Credit

It is prudent not to apply for credit while you are trying to repair your credit. But in some cases, emergencies arise or you may want to get some things done right now and not wait too long. In these cases, there are places where you can apply for credit cards, personal loans, auto loans and mortgages with bad credit.

Credit Cards

Orchard Bank Classic MasterCardOrchard Bank(42141)Credit: Orchard Bank

  • "An excellent credit card for help rebuilding credit scores; reports to 3 major credit bureaus monthly
  • Acceptance at millions of locations worldwide, including website purchases and reservations
  • Your account information is updated and at your fingertips 24/7 so you can manage it your way
  • Email and text messages are available to remind you of your upcoming payment due date
  • On-call customer service representatives to assist you with questions or concerns"

First PremierFirst Premier(42139)Credit: First Premier

  • Acceptance at millions of locations worldwide, including website purchases and reservations
  • "When you apply for a First Premier Bank credit card, your initial credit is $300. However, that amount will be reduced to $225 because you will be charged an annual fee of $75. But in addition, you will also be charged a one-time processing fee of $95. From the second year onwards, the $75 annual fee will be charged monthly ($6.25 a month)". The APR is high at 23.9%. But it is a credit card and you will get increases based on your payment history.
  • On-call customer service representatives to assist you with questions or concerns

Applied Bank Visa CardApplied Credit(42138)Credit: Applied Credit

  • Get Your $500 Unsecured Visa® Gold Card Today!
  • No Deposit Required
  • Automatic Monthly Credit Bureau Reporting
  • No Application or Processing Fees
  • Worldwide Acceptance at Millions of Locations
  • Free 24/7 Online Account Services

Personal Loans

  • Collateral/Title loans: You can get personal loans through a local credit union or a bank where you have a personal connection or history. You'll need to put up collateral such as a car-title that is paid in full, a home, jewelry or something of value that the lender to make them less nervous about lending you money when you have bad credit and a history of non-payment.
  • Friends/Family: You can also try your family members. It is generally never a good idea to borrow from family or friends, but in cases of dire emergencies, make an exception to that rule. You family members and friends would most likely lend you money because they know you.
  • is a loan finder that helps you find financial institutions that will lend you money. There are some lenders that will give you up to $1,000 in personal credit.
  • Net is said to be America's largest online source for personal loans. According to the site, four out of every five applicants are approved for personal loans.
  • Fax Free offers a choice of over 150 lenders who will compete to lend you money. You can get an answer in as little as one hour.
  • Peer-to-peer lending: This is something new that is changing the way people borrow money. Instead of banks, your peers lend you money. Companies like are really giving people options and offering personal loans up to 25,000.

Auto Loans

  • Auto Loan offers Instant online approval for all types of credit including bad credit. The applicant must be at least 18 years old and make a minimum of $1200 monthly.

Other Auto Loan Programs

  • Auto Loans


Acorn housing: During this last presidential campaign, Acorn really got a bad rap. Unfortunately, the tactic for the GOP to use it against the Democrats and smear a company that has done a lot of good in many communities across America is completely shameful. Acorn is not like other sub-prime lenders who took advantage of the people they were supposed to help. Unfortunately, because of the atmosphere during the presidential campaign many people in poor neighborhoods or first time home buyers with less than perfect credit may suffer if the damage that was done to Acorn is not repaired. They do work with your credit and help you step by step in the home buying process. They help you repair your credit and the interest rates for home loans through Acorn affiliated banks, are usually lower interest rates.

NACA Housing Program or Neighborhood Assistance Corporation of America is something similar to Acorn. However, their first time homebuyer's program is much better. Like Acorn, they also help you step by step through the home buying process. You do not have to have perfect credit and many people can buy homes with credit scores in the 600 range as long as you can prove you can afford it and prove that you are paying on your current debt and can continue to pay on the debt after the mortgage loan is granted. NACA loans are usually the best at around 5 percent interest rate at leading banks across American. NACA also has a support system that helps borrowers if they can't pay their mortgage.

Other Things to Consider

Emergency Fund

Even though you may be going through tough economic times, it is always good to have an emergency fund. Ideally, your emergency fund should be at least six to eight months of living expenses, which includes credit card payments. Here is an example of a monthly budget:

Mortgage/Rent $800

Food $200

Electricity $100

Transportation $50

Clothing $100

Entertainment $50

Insurance $400

Telephone $100


Total $1,800 in monthly expenses

In this example, you would need to save 10, 800 to keep you a float for six months which would enable you to have some time to correct the issue before falling deep into debt. In this economy, it is good to have an emergency fund for at least one year. An emergency fund should be different from your other savings and should only be touched if you lose your primary source of income. That number may seem like a lot to most people, however, you can save it over a short time by either getting another job or cutting back on some expenses. Of course, this means you have to have a budget. Not having a realistic budget is one of the reasons why we get into financial jams because we live way above our means. You need to have an emergency fund and a realistic budget!

Move Away From Using Credit

Try not to use credit for everything. If you cannot pay it back in less than three months, then save your money until you can buy it with cash. Do not buy anything on credit that will take you more than 6 months to pay off. Always pay more than the minimum to cut down on the amount of interest you will have to pay in the end.

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References and Resources Peer to Peer Lending

Wall Street Journal: Financing

Washington Post : In a Tight Market, Borrowers Turn To Peers

Federal Trade Comission: Credit Repair Guide