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A Blueprint For Rebuilding Your Credit
So you're credit isn't
great. It may even be bad. Don't
give up - it's possible
to bounce back and rebuild your credit
history. The most important thing
to remember is that from now on, any
credit you keep or open must be paid
on time, every time. You will begin
creating a better credit picture in
just a few payment cycles, a positive
trend that potential creditors can
use to gauge how serious you are about
putting your credit past behind you.
In fact, being able to repay a variety
of new accounts is a key step toward
rebuilding your credit. So, devising
a strategy to open and pay off as
many different kinds of accounts as
you can is a better objective than
simply adding more debt to an existing
credit card - especially, if you're
working toward future goals such as
a mortgage or other large loan.
- 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.
- 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.
- Still no luck? Consider a secured
credit card, which is 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.
- 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).
- If you have money set aside,
you can open such accounts for
the sole purpose of paying them
off.
It takes some time for your new credit
history to gain momentum. You'll be
demonstrating that you are not depending
on certain credit cards and loans
for 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 will 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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