Step 5. Rebuild Your Credit History - Get New Credit

By now you should have taken action on the previous 4 steps. If you have not, you should get them started in parallel with this step. Without cleaning up your past the new credit you are about to get will not have as much impact on your overall credit score.

As we discussed in the Five Factors You Need To Know section, it is important to have both types of credit in your credit history. The two types of credit are Revolving (credit cards) and Installment (Auto Loan, Home Loan). You need to start thinking in terms of starting over. As you work on cleaning your past, you have to start building a new history for your credit report. By doing this you are working the issue from both ends, and as a result you will see your credit score improve much faster. If you are not sure how to clean up your credit history, please read the Take Action - Dispute and Correct section.

OK, now lets get down to business. You need both types of credit (revolving and installment) and you are probably thinking you will never get approved. Well think again. You actually have more options than you think. We did some digging for you and found some very good offers to get you started.

Installment Loans:

Things get a little more complicated with installment loans. You will have to work a little harder and please make sure you don't get yourself into hot water by not paying on time or buying a car that you cannot afford. Don't be fooled into thinking that the loans will be low interest no money down type loans. Bad credit costs you money and this is why you are trying to fix it. It is better to pay a little more now and start on a path of good credit history than to not do anything and keep paying for your mistakes.

When it comes to installment loans you have two options, small Personal Loans and/or Auto Loans. For an Auto Loan you will want to put down as much money as you can afford so you can refinance the high interest loan as soon as your credit improves. This will save you a significant amount of money. If you can afford it (and be honest with yourself) you can take out a personal loan to use as a down payment on a car loan.

Personal Loan:

If you are/were in the military or Department of Defense, you can try Pioneer Loans. Pioneer understands your financial situation because they have years of experience serving military service members and Department of Defense employees. Pioneer Military Lending offers interest rates lower than most credit cards and credit unions for all ranks and branches.

If you do not qualify for a Pioneer Loan or if you got turned down, your best bet is with CashNetUSA.

Auto Loans:

Bad credit car loans are complex. It is not as simple as just going to a local Bank and getting a loan. However, there are companies out there that partner with lenders and dealers that can accommodate "bad credit" situations. We recommend a service called Web2Carz.com, LTD.. They specialize in finding auto financing for people that have bad credit. If you are in the market for a car, this is a great resource.