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Rebuilding Credit History after Abusing Credit Card Applications
There comes a time in life when we decide to finally become grownups and buy a house. But after filling out all of the paperwork, we discover that we have bad credit. How does one go about repairing that credit after accepting every "Best Credit Card Deal Ever" that landed in our mailbox? Do we get rid of the credit cards we have? We could, but there is a simpler way. Get more credit...no, really, it works.
It's never too late to clean up your credit. But the first thing you need to do is change how you look at your credit cards. That Visa or MasterCard is not cash. It's simply a little piece of plastic we use to "guarantee" payment. And you have to pay for that guarantee with something called "interest". And that's what got you into trouble in the first place. Let's look at the steps necessary to clean up your act and your attitudes...without emptying your wallet of every piece of plastic you own.
Admitting You Have Bad Credit History
Like Alcoholics Anonymous, the first step in repairing your credit problems and your attitudes is admitting you have a problem. The problem could be your own fault (compulsive spending, too many credit cards, etc...), or the problem could have been due to circumstances beyond your control (catastrophic illness, loss of a job, etc...). Either way, you still have a problem and need to solve it.
Whatever the reason for your bad credit, and depending on how serious your past and present credit problems are, it will take time and patience to establish good credit. If you have a slightly damaged credit history, with only a few late payments, you may be able to bring your accounts up to date and improve your credit in just a few months.
On the other hand, events like bankruptcy, court-ordered judgments and foreclosures could, and likely will, stay on your record for years. But you can still fix the problem. You just need patience and discipline.
How Bad Is Your Credit History?
The next step is determining how bad the problem actually is. Call or email the three main credit reporting agencies (Experian, Equifax and TransUnion) and request a copy of your credit report. Is the information accurate? If not, contest it. If the information is accurate (late payments, too many requests for credit, etc...) you can begin the process of repairing the damage.
Next, you want to focus on the negative information you believe probably should be on your report to ensure it is completely accurate. Whether the information is accurate or inaccurate, it will have an effect on your credit rating. So start with the inaccurate information. If you have proof that information is inaccurate, send that proof to the reporting agencies. Follow-up to make sure the agencies have corrected the information.
Next, look for information that is accurate but dated. Some information, whether accurate or not, has to be removed from your credit report by law.
Now to face the problems you caused yourself. Do you remember when you thought to yourself, "I'll pay the Visa bill next month," or "I'll make less than the minimum payment to American Express this month?" Well, now it's time to pay for that arrogance. Accurate information cannot be removed from your credit report. The only thing you can do is rebuild your reputation as a good credit risk. Pay all of your future bills on time. Over time, your "most recent behavior" will help to improve your credit.
New Credit Cards Repair the Old Ones
Now comes the hard part - dedicating yourself to the plan, tightening the belt and exercising patience. The first step in this phase requires either paying off or paying down outstanding debt, especially any debt that is reported as a write-off or past due. One way to do this is to ask your existing credit card companies if they have a balance transfer credit card. If they do, and you can get approved, take all of your other credit cards and transfer the balance. Do not charge anything else on that card. Tighten your belt. Don't use your other credit cards to pay for your entertainment. Just because you just paid off that credit card doesn't mean you need to start charging it up again. That's what got you in the mess you are in now.
Once you are on tract with your payments, you'll want to eventually open one to a couple new accounts to help in the rebuilding process. To do so you will probably need to apply for a credit card and/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.
Just because you apply for new credit doesn't mean you'll get it, even with your rapidly improving credit report. Fine, move on the Plan B....as secured credit card. With a secured credit card you put up collateral to secure the card. This way, the credit card company has its money and you can continue on with your new credit attitude.
After taking all the necessary steps, recheck your credit report in a year. You should see a much improved credit report. At that point, you should be ready to apply for an unsecured credit card.
From that point forward, you can continue to improve your credit report by limiting the amount of credit you request, limiting the amount of available credit you use and always paying your bills on time.
Ultimately, there are no tricks or quick remedies when it comes to rebuilding your credit, despite what many credit repair agencies claim. The reality is simple...pay your bills on time and do not max out your credit cards.
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Actually you can make the cookie rumble the way you need it. You just need to make some efforts and get used to saving on utilities. Keep on reading and you will find several tips on how to reduce your utility bills and cut down your monthly credit card payments.
