REBUILD AND RESTABLISH CREDIT

Steps to Rebuilding Your Credit Score

1. Identify why you have a credit problem

If you obtain a copy of your credit report along with your credit score, you can find out if you have bad credit. Knowing that you don’t have good credit is not enough. You need to know why you have bad credit.

2. Create a spending plan

3. Deal with your debt

Pay down your balances

 As mentioned ealierIf you are using 75% or more of your limit on any of your credit cards or line of credit, than you should focus on paying down your debt as quickly as possible below 75%.

Catch up your late payments

The longest that negative information can stay on your credit bureau

4. Make your payments as agreed

5. Re-establish credit. Here's how...

Once you get started fixing your credit, don’t wait until all of the negative information on your credit report falls off before you try to re-establish your credit. Some people get themselves into a situation where they end up with no active credit—only debts that they have paid off. If you have paid off all of your debts, and none of your past negative information is reporting on your credit bureau, you will have no credit score (or a negative score) unless you have at least one active credit account reporting. Without an active credit account, the computers that calculate credit scores can not generate a positive credit score for you because they can’t evaluate how you are currently using credit. This is why it can be a good idea to have at least one credit account (this can be a credit card, line of credit or overdraft) that you maintain responsibly at all times so that the credit system can create a positive credit score for you.

If you are in the process of fixing your credit by paying your credit cards as agreed and waiting for time to pass, it may be a good idea to get one credit card or an overdraft account so that it can report on your credit bureau. This way when the negative information falls off your credit report there is a history of good information which can instantly give you a good credit score once the bad stuff is gone.