First things first, stabilize your budget! You cannot think of rebuilding your credit if you haven’t stopped the bleeding! Most people that have bad credit have too many debts to be able to rebuild their credit. Your first goal should be to lower your monthly payment to a comfortable amount. You can do this in many ways: consolidating your debts, contacting your creditors and negotiating a smaller monthly payment and finally, although you should have a financial adviser look at your current financial situation before doing so, go bankrupt.
Once you have stabilized your budget, what you will want to do is get new credit. This is very important as it shows on your credit report that you have obtained new credit since you consolidated your debts / negotiated with your creditors / went bankrupt. In essence, this is your second chance. If you can secure a credit card and use it wisely from this day forward, you will have taken the first step into rebuilding your credit. Your best bet would be secured credit cards or department store credit cards.
After that, if your budget permits it, get a car loan or a small personal loan. I would advise you to get between 2 and 3 financial engagements, as it will rebuild your credit faster. If your budget is too tight to get another loan, keep the personal loan in your bank account and pay the monthly payments. This way you are not really getting into more debt, you are just paying the bank interest to rebuild your credit score. Avoid taking a small loan and paying it off at the end of one month, as this will have minimal impact on your credit score. The banks want to know if you can manage a loan, not if you can hold on to their money for 30 days!
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