If you are in debt, you may feel confused as to how you got there. While student loans may make up a large part of your picture of debt, you may also be able to look back and find habits that caused you to overspend habitually.
Whatever the case may be, you will want to start rebuilding your credit history as soon as you can because this will affect how much you will pay in interest rates for a car or a house in the future and can also affect getting a new job or starting a new business. Follow these four tips for building healthy credit as quickly as possible.
Pay down Debt on Time
One of the easiest ways to build your credit is to pay your bills on time and to work gradually on paying down your debt. How much extra you can pay each month will depend on your income and expenses, but even a little extra paid towards your credit cards each month can equal huge savings in interest. Be sure to focus on more than just credit card payments because even late or missed utility or rent bills can show up on your history.

Open a Secured Credit Card

While this may not seem like a great time to open a new credit card, a secured credit card is a safe way to build a good payment history. While most credit cards are unsecured, a secured one is attached to a savings account, which it uses as collateral. As you make regular payments on this card, your good payment habits will be reported to the credit bureaus each month.

Get an Installment Loan

An installment loan will improve your credit in much the same way as a credit card would if you make payments on time. However, because a loan is a type of installment plan rather than a rotating line of credit, it will help to diversify your credit history. A car loan and home mortgage are types of installment loans. However, it may not be a good idea to take out a large loan at this point. Even a small personal loan can help you accomplish this step.

Consider Declaring Bankruptcy

If you feel that you are at a standstill and it is impossible to pay back the amount of debt you owe, you may need to consider filing for bankruptcy with the help of someone like the Law Office of Barbara B. Braziel or another Attorney. Filing for bankruptcy will stop creditors from hounding you for money. You will be able to get rid of certain debts, but keep in mind that you will still hold onto debts from mortgages, student loans and income taxes.
The exact road you take to rebuild your credit may depend on your circumstances, such as the amount of debt you have and your ability to pay down debt each month. If you have an extreme amount of debt, such as from medical bills, you may need to consider filing for bankruptcy. However, because this is usually a last-ditch effort, see if you can first build your credit score and improve your credit history by beginning to practice sound financial habits.

Author's Bio: 

Kara Masterson is a freelance writer from West Jordan, Utah. She graduated from the University of Utah and enjoys writing and spending time with her dog, Max.