I am trying to rebuild my credit. I have paid off most of my debt. What is the best way to go about?

Question

rebuilding my credit. I would like to have credit good enough to buy a house at the end of the year. I make good money at this time in my life. I have no open activity on my credit , i do have a checking account. I think my credit score is about 480-500.

Answer 1

The quickest way to raise scores and least harmful to your scores is to have someone add you as an authorized user.

See if someone (spouse or another family member) will add you as an AU to their card(s) If you are added you should make the request that the card company reports the card on your reports. If you have a spouse that will add you, by law they are required to report the card to your credit reports.

Be sure the card(s) you are added to have at least a few years history to them, no past or present lates and the utilization is low - or you would only be defeating the purpose.
Never become a joint user on a credit card.

If you find someone that will add you to their card(s), wait until it/they starts to report then apply for another card or two in your name.

If you can't find someone to add you as an AU, you will probably have to start with a secured card.

Stay away from the super subprime lenders that require fees that would almost be the same amount as the credit limit.

Check with your bank or credit union for the types of cards they offer.
You might also check with Orchard Bank or HSBC. They are good starter cards and do not show on your credit reports as secured. You may have annual fees with them but the fees are generally small and in a year you can request they waive the fees, which they may or may not do at that time. But a super subprime will "never" even think of waiving fees.

Store cards are fairly easy to get, but they do not count as much on your scores as major credit cards.

You will probably see a bit of a drop in your scores at first, but around 6 months (more or less) the inquiries and the new accounts will start to even out and you may see it start rising.

And if you start out as an AU, your scores will rise much faster after applying for your own cards.

You don't have to use the cards much at all. Just use them occassionally for a small purchase then pay when you get the statement, so you won't be paying interest.

If one of the cards you applied for and received does have a low interest, you might use it to purchase your groceries with (putting aside the cash you would have normally used so you will have it on hand to pay when you receive the statement) then pay almost all of it when you get the statement. Leave something like $5 or $10 leftover, then pay that the next month - to show a payment history without having a large sum accruing interest.

Answer 2

I agree with Echo about being added as an authorized user, applying for secured and store credit cards, but I'll add some more to that. If you can generate enough of a savings, you can take out a secured installment loan. How it works is that the amount you borrow would be secured by the same amount you have in your savings account. $1,000-2,000 would be ideal to take out a loan. One suggestion would be that the proceeds from the loan should be invested in a certificate of deposit that matches the length or a little shorter than the length of the term if the loan. That way, you're collecting interest 2 ways, the money originally in your savings account, and the proceeds from the loan collecting interest as well, you're guaranteed to pay back the money because you're investing it instead of spending it, and you're building credit at the same time. Having installment loans adds to a better mixture of credit besides credit cards alone.

Another thing that you can do is report monthly payments such as rent, utilities, cable, insurance, and other regular monthly payment you make that don't show on your credit report with PRBC. PRBC is a credit bureau that provides "alternative credit" by reporting the types of payments I just mentioned in a way to help people establish credit or rebuild credit. Under federal law (Fair Credit Reporting Act), you're entitiled to have this report included with your other credit reports when applying for credit. This report can help obtain mortgages (http://prbc.com/consumers/how/mortgage.php)

Payments as far as 3 years back can be verified and reported for a fee. They also have a billpay service with CheckFree Web that can help you keep current and future payments reported for as low as $4.95 a month.

I hope my answer along with everyone else's will help out for you...

Good Luck!

Answer 3

The best way to rebuild credit history is to pay your bills in time. Besides you can ask your closed friend or relatives with good credit history to be a co-signer and apply for good credit card. So you will get card with good features, avoid high fees and rebuild your credit history.

Answer 4

Try and open multiple credit cards in your name, and keep a zero balance on them. Then after a couple of months, try and increase the limit. Having things like credit cards with high limits and low or zero balances improves your credit. Also, make sure to make ALL payments for anything on time. If you google "fixing your credit" or something like that, you will come up with all sorts of ways to work on improving your credit score.

Answer 5

i think best is to get a secured credit card from your bank. it is essentially an account you put money into as collateral for the CC the bank issues you. eventually you can work your way up in credit.

credit cards suck, but they are a great and fast way to rebuild a credit score.

also, time will help.

but unless you go for sub prime, which just took a dive, you won't get credit for a house with a credit worthy co-signer.

Answer 6

Get your credit comments from all 3 credit bureaus and dispute something this is unfavorable. many circumstances the organisation that reported it won't respond interior the 30 day time shrink and additionally you may get those unfavorable products bumped off! it fairly works!!!