In layman’s terms, your credit defines the likeliness that you will fulfill your financial obligations. Your credit is your word. It is your bond. In the eyes of creditors, it’s your reputation and a defining characteristic that allows them to put a dollar figure on the amount of money they will lend to you or your organization. Just as a poor reputation may hurt your business or personal standing in a community, poor credit will damage your reputation in the eyes of banks and lending institutions.

Bad credit and no credit are entirely different issues, yet we can treat them in a somewhat similar fashion. No credit means you have no credit history. Your financial reputation has not been established. Bad credit indicates a poor financial reputation. You have an established credit history that has been tarnished.

Whether you have bad credit or no credit, the steps to credit worthiness are basically the same. Get a lender to extend you some type of credit and make on time payments. Repeat this process over and over again until desired results are achieved. Sounds easy right? Fundamentally this seems like a very simple concept; however the reality is much different. Our lives are fluid. They are constantly changing. We have to deal with unforeseen events like lost jobs, pay cuts, medical bills and Ivy League school tuition.

The absolute…#1… most important…cannot stress this enough… concept that will lead and guide you on your path to good credit is: sound decision making. In today’s materialistic society, it is easy to find yourself with an empty bank account and bills that are spiraling out of control. So before buying a new car, upgrading to an IPhone 4 or buying that 60 inch plasma TV that you have always wanted, ask yourself; “Do I really need this item and could I afford it if I lost my job tomorrow?” If you make sound financial decisions you can avoid many of the credit related issues that plague nearly all Americans.

Simply stated, this is “what you need” versus “what you want”. You need food, shelter and basic clothing. You want an Xbox, a flat screen TV and an IPad. Now obviously there are many choices amongst the “necessary” items like food and shelter. For example, you need a balanced diet. This diet does not have to include filet mignon. In addition, you need basic shelter that is not beyond your fiscal means. This does not have to include a mortgage that represents 50% of your monthly income.

Buy what you need first. If there is money left over, save it for a rainy day. If there is something that you really want but don’t need, look in the mirror and ask yourself “Do I really want this item and does this item define me?” If the answer is yes, buy a new mirror. This all goes back to sound decision making.

To build or re-establish credit, someone will have to extend you credit. Unfortunately, if you have no credit or bad credit, lenders will not be throwing money at you. A little creativity may be required on your part.

Below we have listed a few of the options available to you.

  • Do you have a retirement account or 401k? In many cases this can be used as collateral when applying for a loan.
  • Do you own a car or have some kind of equity in your home. These can also be used as collateral when applying for a loan.
  • Did you know that some utilities and/or cell phone providers may report to credit bureaus? It doesn’t hurt to check. If they do, this may help you build or re-establish your credit.
  • Overdraft protection on your bank account. This works very much the same as a credit card and you can generally have your bank report this to credit bureaus.
  • Credit cards for bad credit. These cards have higher interest rates and fees. However, they can be great tools for building and re-establishing credit if you make, on time, minimum monthly payments.
  • Get a secured credit card. Most secured cards will report to credit bureaus and work the same as a standard credit card. The difference is that your credit line will be determined by the amount of money you provide the issuing agency to hold in escrow as collateral. In essence, if you give them $5,000 to hold in escrow, they will issue you a $5,000 credit line. You will have to make, on time, minimum monthly payments to build or rebuild your credit with a secured credit card.
  • Get a Cosigner. Just make sure that you understand that missing a payment will hurt your credit and the credit of the cosigner.
  • Take out a personal loan and back it with a CD(Certificate of Deposit) that you purchase from the bank.

Nobody can look into the future but we can plan for what we know. Create budgets that allow you to track and control spending on “what you need” and “what you want”. Most people are shocked by their frivolous spending habits once they start tracking them.

Remember; treat your credit like you treat serious promises made to friends and family members. If you continue to make, on time, payments to all creditors you will enjoy little or no fees, lower interest rates and ease of acquisition when you go in to get your next loan.


  1. This article was very helpful to me. It made me rethink or think more clearly about the way I spend and provided me with the tools necessary to start my Credit rebuilding journey. Even though I may not qualify for the monies needed to get started, I do have some thoughts as to what avenue to begin on this Long road to rebuild my Credit. Thanks so much for the insight.

    1. I had good credit & 20yrs ago someone stole my drivers license & opened up accounts all over the place. I’ve gotten all but 2 things off my credit. Then I got it back up again & then I lost my Mom & then 6mons & 10 days later my husband, then 2yrs later my Dad. I went into so deep a depression that my family took advantage of me & runt my credit again! I’m trying to build my credit back up but no one wants to help me cause I’m not $10,000.00 in debit! I lost everything I owned & am having to start over again but I need some credit to help get it!
      Debra Eaves

      1. Debra,

        That’s a terrible situation. Identity theft is becoming more and more prevalent these days and it’s very difficult to recover from. I will take time to rebuild your credit and you can do it! You want a secured credit card in this situation. Basically you secure your credit line by making a deposit and then it works just like a regular credit card and reports to the major credit bureaus. I believe Discover offers one that has rewards and a direct path up to an unsecured card. Best of luck Debra…chin up!

  2. I just read this it has given me great information of which I had never thought about! I guess this is not the time to put this information on this site, but I ended up in this mess in my life with the bad credit because of the extremely POIR choices I made in the men I met 3 total then I gave up not only the thought of ever marrying again, but dating again! These men had no care or concern when it came to my Credit, but it turned out they just wanted a Lady to show off, and My Money to boot! I guess you can say I have very POOR judgement when it comes to men! LADIES BE AWARE not all men are what they portray themselves to be! Bottom line I’m in this mess because I got take advantage of and it is so EXTREMELY difficult to dig YOURSELF out of! I PRAY THIS PROGRAM IS WHAT IS CLAIMS TO BE! I AM SO TIRED OF BEING SCAMED! IF THEY ARE WHAT THEY CLAIM TO BE AND WILL HELP ME I WILL BE THE FIRST TO PUT A NEW RESONSE ON THIS SITE PRAISING THIS COMPANY, AND I WILL REFER THEM TO ALL I KNOW THAT NEED THEIR HELP!!!😇

    1. Hi Janice,

      I am glad you found this article helpful. Our goal at UnitedStatesCredit is to help connect people with lenders and credit products, but also to provide you with some of the tools needed to avoid scams and other credit missteps. We constantly update our blog with new information. We are not a lender but rather a tool consumers can use to help them find credit. You must always take caution and due the required diligence anytime you sign up for any kind of loan or credit product. Best wishes.

      1. Hi . As I’m reading this I was surprised of how much I don’t know about lones and credit cards! I’m trying to build my credit back up.. I had gotten really sick.and not able to work anymore! And my life seem to get out of control.. I have been trying to get it back .! But I just made it worse and gave up.. So as I’m reading this I think I can fix it.With the right know how !! Thank you

  3. I learned a lot from this article mainly what I need and what I want made me think a lot different made me wiser

  4. I know how that lady feels,cause I’m in that same mess,Which I can’t hold no one responsable but my self.

  5. I’m in the same mess. I’m trying to work with my credit card people but it’s hard. I think this article opened my eyes. I had good credit till I got hurt at work, then got tied up with a Dept relief program,

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