Having bad credit certainly whittles down a borrowers options when it comes time to buy a car, a home or another big ticket item. While those home and car buyers with spotless credit can benefit from todays record low interest rates, those with less than perfect credit are typically required to pay more, often much more. It is important therefore, for every consumer to get a handle on his or her credit situation before the time comes to make that big ticket purchase.

That is because even a one or two percentage rate difference can make a huge difference when it comes to something like a $20,000 car, or a $200,000 home. The best strategy is to take the steps to repair your credit, and keep it repaired, before that big ticket purchase looms on the horizon.

It may seem strange, but the hard money lender can often help consumers to rebuild their damaged credit. If the credit damage in the consumers past is severe enough, the hard money lender may be the only option on the table. While those hard money and bad credit loans typically come with very high interest rates and very restrictive repayment terms attached, they can be used to rebuild credit for the future.

When using this strategy, however, it is important for the consumer to start out small. Taking out a small hard money or bad credit loan is a good idea, since this will help to keep the payments low and affordable. The goal of this strategy, of course, is to build up a history of on-time payments. A missed payment or late payment will only make an already bad situation even more untenable, so care must be used to make all payments on time.

It is also important to keep scrupulous records of all payments, and to keep copies of all cancelled checks or money orders. This documentation is very important, as it will be your defense with both the lender and the credit-reporting agency should a dispute arise at a later date.

It is also important to review a copy of your credit report at least once a year. Reviewing your credit report and credit score on an annual basis is the best way to track your progress as you move from bad credit to good credit. A new law offers each consumer a free copy of their credit report from all three major credit reporting agencies Equifax, Experian and TransUnion, once a year, and all three agencies offer consumers a look a their credit score for a nominal fee. It is very important to take advantage of this great new perk as you rebuild your damaged credit.