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Rebuilding
Your Credit
Bad
things can happen to good people. If this happens
to you, there is hope. There are ways you can
get your credit back in shape. But you have
to start working on it today -- and keep working
hard to show potential creditors that you're
serious about getting your credit back in order.
As you do so, your credit score will improve,
resulting in better credit offers and a substantial
savings in money.
Get Started Now!
Open new accounts and pay them off.
Being able to repay a variety of new accounts
is a key step in rebuilding your credit. That
means that devising a strategy to open and pay
off as many different kinds of accounts as you
can is better than adding more debt to an existing
credit card.
Start small.
Rebuilding your credit
can be similar to starting
over from scratch, and
starting small may be
the easiest option. Credit
cards from department
stores or your local
credit union can be useful.
Consider asking
for help. If
you can't qualify on
your own, ask a friend
or family member to cosign
for a small loan or credit
card. If you can stay
current on a major credit
card account or small
auto loan, this will
speed up the process
of re-establishing good
credit on your own.
Consider a secured
credit card.
They are guaranteed by
a deposit that you make
with the credit grantor.
The cards offer the purchasing
power of a major credit
card. Just make sure
the grantor reports payment
histories to one of the
three major credit bureaus
so you're building your
positive payment history.
Use your new
accounts in moderation.
And make payments that
are more than the minimum.
You can keep a small
balance so that your
positive payment history
will continue to show
up on your credit report.
Keep your balances low. Avoid carrying a balance that is more than
30% of your credit limit (creditors may view it as excessive debt that
you may not be able to stay current with).
Time Frames
Typically there are generally accepted time frames that you need to
meet showing you have rebuilt your credit. Keep in mind these are only
guidelines. Here are a few of those guidelines:
If you have had more than a few recent late payments, guidelines typically
say you need to have 12 months with little or no late payments before
you can qualify for most programs.
If you have filed a Chapter 7 bankruptcy, you must have 2 years re-established
credit after the discharge (not the filing).
Typically all collections and judgements have to be paid prior to closing
your loan. Sometimes exceptions may be made for medical collections.
It takes some time for your new credit history to gain momentum. You're
demonstrating that you are not depending on certain credit cards and
loans for your financial survival.
That's why opening and paying down accounts may make it a little easier
to get more credit. With patience and timely repayments, you'll likely
be able to build a new credit history that creditors will look upon
favorably when making decisions about your ability to handle even more
credit.
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