Building or repairing your credit is not an overnight thing. It is an ongoing process that you must approach with determination, diligence and discipline. Follow these tips:
Keep your existing credit accounts in good standing. You can repair your credit by improving the way you handle existing accounts, as well as by obtaining new credit. In general, pay more than the minimum payment - but, if you are in financial trouble, at least pay what the creditor asks for on a regular basis while you work on improving your finances. However, even paying $20 more per month will shorten the payoff period considerably.
To rebuild credit, apply for a credit card or small loan from your bank, credit union or a local department store. Explain that you have had credit problems, but that you are serious about improving your credit history. If your credit problems are severe and/or recent, your application may be denied. Don't take rejection personally. Most credit denials - even by local stores, banks and credit unions - are based on credit reports or lack of credit history.
Ask a relative or friend with good credit to co-sign your credit application. A co-signer promises to pay if you don't - make sure the co-signer understands this serious responsibility. After one year of making all your payments on time, apply for credit on your own and when you get it, close the account you opened with a co-signer.
Get a secured bank credit card. Secured cards are backed by money you deposit and keep in a bank account. If you don't pay off your credit card bill, the money in your account will be used to cover that debt. Even people with poor credit may be able to get a secured Visa or MasterCard. Secured credit cards can help you repair your credit. You will probably qualify for a secured credit card if all your bills are paid and you have had no bad marks on your credit for at least six months.
Make sure the credit card company will report your payments to credit bureaus. Show that you can handle credit responsibly by using your card to make a few purchases. Make all payments before the due date and, if possible, pay your balance in full each month. After one year, apply for a regular, unsecured card.
Your credit line, the maximum amount you can charge on a secured card, is usually equal to the amount of your deposit. Look for a card that will pay interest on your deposit. Most secured credit cards have annual fees ranging from $20 to $50. Be sure to research the products available and avoid any unnecessary fees.
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Building or repairing your credit is not an overnight thing. It is an ongoing process that you must approach with determination, diligence and discipline. Follow these tips:
Make sure the credit card company will report your payments to credit bureaus. Show that you can handle credit responsibly by using your card to make a few purchases. Make all payments before the due date and, if possible, pay your balance in full each month. After one year, apply for a regular, unsecured card.
Your credit line, the maximum amount you can charge on a secured card, is usually equal to the amount of your deposit. Look for a card that will pay interest on your deposit. Most secured credit cards have annual fees ranging from $20 to $50. Be sure to research the products available and avoid any unnecessary fees.