How to Repair your Credit

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Repairing your credit is not as hard as it might seem.   There’s no magic formula to rebuild your credit today.   It takes time, effort, and patience.   Follow these simple steps to repair your credit today!

I’ll start by saying this.   I have very little faith in paying a credit repair agency $500+ to rebuild your credit and “remove” all the delinquencies or negative trade lines.   I’m not saying that all credit repair agencies are out there to scam you, but if you follow these simple steps, you should see a noticeable increase in your credit score.

The first thing you should do is to obtain a copy of a consolidated credit report.   A consolidated credit report will include all three major credit bureaus (Experian, Transunion, & Equifax).   You need to look over your credit report to make sure that there are no accounts appearing that don’t belong to you.   If you find any items that aren’t yours, you can take the necessary steps to remove them. f your credit score was damaged due to delinquencies, it will be removed after 7 years.

One tactic that many consumers have used in the past is being added as an authorized user to someone’s account with a long & positive credit history.   You’re added to their account just long enough for the good history to appear on your credit report and then you’re removed.   Unfortunately, the credit bureaus recognized this tactic and no longer take this into consideration to compute your credit score.

So what’s the most effective way to rebuild your credit?   The answer: obtain a secured credit card.   A secured credit card will require you to promise collateral to receive credit.   The money will be placed in an interest bearing account by the card issuer and is refunded to you after you have proven that you can use credit responsibly.   Your credit limit will be the amount that you deposited.   In the event that you default, the card issuer can take the funds to pay off your debt.   To see a list of secured credit cards you can apply for, go here.

The advantage of getting a secured credit card is that you will not get a rejection on your credit report (which will hurt your credit more).   Every time a creditor pulls your credit report (to determine whether to grant you future credit), it will show up as an inquiry.   If there is not a corresponding credit card opened, it will affect your credit.

When choosing which secured credit card to open, first check to see if they report to all major credit bureaus.   This is a must!   We need your new payment history to report to all major credit bureaus.     Now that you have opened a new secured credit card, never spend over 35% of your limit.   So for example, if you deposited $1,000 with your card issuer, your monthly balance should never increase $350.   Pay this balance off every single month.   I would suggest opening up two secured cards so you can get more traction going on your credit report.

After doing this for about a year, you should see a noticeable difference in your credit score.   Enjoy your new rebuilt credit!

 

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