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How to get a credit card when you have bad debt

It's hard, but not impossible, to get credit even though you may have a history of bad debt. The trick is to show that you've changed your ways—so open a savings account at your bank (and put some money in it) and begin to make payments on all your outstanding debts. Credit card issuers want to see that you can make your payments, and that you are trustworthy. Here are some other tips that might help when you apply for a new card:

• Get a co-signer who has a strong credit history to help you
• Go to your bank and see if they'll issue you a card
• Get a secured card (these are secured by money you put down)

Additional fees or restrictions

Yes, sometimes your credit history will mean that you'll pay higher interest rates or you may not get a particular card at all—at first. But persistence will pay off for you. You need to show that you can handle credit by making purchases and paying them off. Over time, this will open the doors for you to better cards with lower fees and fewer restrictions.

About your credit rating

There are three consumer credit reporting offices in the US .

Equifax: 1-800-525-6285 www.equifax.com
Experian: 1-888-EXPERIAN (1-888-397-3742) www.experian.com
Trans Union : 1-800-680-7289 www.transunion.com

You should check your rating at each of these offices at least once a year. A recent change to the Federal Fair Credit Reporting Act (FCRA) now allows you to request one free copy of your credit report each year (go to www.annualcreditreport).

How to clean up your credit

First, be sure your credit report is right. It's estimated that more than 40% of consumer credit reports contain errors. If you find a mistake, fill out the consumer credit complaint report or send a letter to the consumer reporting agency. Provide the documentation necessary to show the entry is wrong. At least then, you'll only be responsible for the mistakes you did make. After that, follow these tips.

• Pay your bills on time, every time.
• Limit yourself to no more than 2-3 credit cards at a time.
• Don't live beyond your means. When you spend more than you make, you get into trouble.
• Keep careful accounts of all your debts and be sure to make payments on all of them, every month, until they're paid off.

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