There are many ironies in the world of finance. One of the biggest ones is that the only way to improve bad credit is through bringing on a new creditor. If your credit is poor and you want to work towards bringing it back up, a bad credit loan can actually go further than any other option towards this goal.
Here is how it works. Your credit worthiness is based on everything that appears on your credit report. If you had loans that were not paid on time or credit cards that were cancelled by the bank, the uphill climb to credit repair is steep. However, the best way to go about the climb is to get a bad credit loan and treat it as you should have your previous loans.
Taking on a bad credit loan and making payments on time sends a signal to the credit bureaus that you can maintain your loans and balances. After a period of time of making prompt payments, you will see that the bad credit loan will actually help boost your credit back to where it should be. Assuming you have done this and taking a bad credit loan helped you get your score back up, eliminate the loan as soon as you can.
These types of bad credit loans can be refinanced or consolidated into a mortgage or home equity line that carries a much lower rate. Now that you have better credit, there is no need to carry the high rates associated with your bad credit loan. It may be ironic to take on a new creditor in order to fix bad credit, but it is also a solution.