Maybe you’ve gone through a divorce and now you’re dealing with a lot of high interest credit card debt, or maybe you’ve fallen behind on your payments after a job layoff. Whatever the reason, you fell behind with your payments, your credit report has suffered for it, and now you’re ready to get back on track. Luck for you, it’s a lot easier to re-build your credit than it was to get out of debt!
Here are some great tips that will have your credit report squeaky clean in no time at all!
First, you should plan on spending about a year rebuilding your credit report. I can hear some of you groaning–after all it took a few years to get out of debt, right? Yes, but you must understand things from a lender’s point of view–they need to see proof that you are serious about keeping up your credit history.
To show your future creditors that you can now be trusted, you will need to re-establish some sort of credit. If you’ve had serious credit issues in your past, you may have to get a secured credit card. These types of credit cards are secured by a bank balance, which will equal the spending limit on the card. The point of them is to build credit when no one else will give you a chance.
If you can get a low interest rate card, you should get one and use it for the sole purpose of rebuilding your credit.
Another credit reporting building method is to apply for a personal loan, and then pay it according to the terms I’ve outlined below.
The biggest thing you can do to rebuild you credit is to pay your payments on time. That means that you can’t be late–not even once. If you are mailing in your payments, be sure to give it plenty of time to not only reach the destination, but also clear the proper processing channels. If you think that you’ve cut it too short, overnight the payment. Don’t let anything stop you from getting those payments in on time! Remember that even one late payment can make a difference of whether or not you get that car or home mortgage loan!
You should also try to pay more than your minimum payments every month. Ideally, you would pay off your credit card every month, but if you can’t do that, then do pay more than the minimum. For example, if your minimum payment was $50 per month, try to pay at least $65. This will accomplish two things. First, it will make you look better in future lender’s eyes, and secondly, because by doing so, you will paying more toward your principle balance every month, (as opposed to interest), and that will reduce the overall amount that you’ll have to pay.
Do all of these things with patience and determination, and you’ll soon find yourself with a credit report that you can be proud of!