Have poor credit, been working hard to pay it off. Is there a way to re-build your credit score.?

Question

Last year I lost my job. I am now working now. However, my salary is less it was before. I caused myself to now have poor credit score. I am working hard on paying it off. I am just wondering if there is a way to re-build your credit score.

Answer 1

Well, it's good to know that you're wanting to take control of the situation with your credit. It would help you to know what makes up your score so that you can better prepare a battle plan:

1. Payment history- 35%
2. Total debt owed vs. available credit- 30%
3. Length of time estalblishing credit- 15%
4. Types of credit established- 10%
5. Inquiries and New Accounts- 10%

Having said that, the first thing you should do if you haven't already is to open a checking and savings account with a major bank if possible to establish a banking relationship. While opening the accounts alone will not directly rebuild your score, what it does is creates an opportunity for credit products in the future by becoming a longstanding preferred customer, and more importantly it provides a means of building/maintaining/rebuilding credit by paying on time. As I showed earlier, paying on time is the single most important factor in building credit. Another thing you can do to help yourself would be to examine all 3 of your reports closely to make sure that there's nothing incorrect on your report. If by chance there are some incorrect information or accounts you don't recognize, dispute them immediately with all 3 credit bureaus. A lot of times people concede that their credit is so bad that they don't bother to check what they really have and usually incorrect information can make a report look far worse than what it really is. Another step you can take would be to round up all the charged off and collection accounts you have from least to greatest and make a plan to address them. Here's links I've posted that explains this more in depth since there are more options on how to fix this. (READ ALL THE LINKS CAREFULLY)

http://www.creditinfocenter.com/debt/settle_debts.shtml

http://www.creditinfocenter.com/debt/neg_rating_after_settle.shtml

http://www.creditinfocenter.com/debt/CanCreditorSue4SettlementDifferences.shtml

http://www.creditinfocenter.com/debt/ActualDebtSuccesses.shtml

Now assuming you have read this, hopefully you will have been able to minimize the damage that the charge off and deliquent accounts have done, then what you'll need to do is open some positive accounts to help build your score. This is why I mentioned opening up a checking and savings account with a bank or credit union. Some of the major banks (which I've posted links to below) offer secured credit cards in which you can place a deposit which is used as collateral to secure a line of credit. For example, if you placed a deposit of $200, you would get a $200 credit line. Now, the deposit isn't used to pay on the card when the bill comes in, that would still need to be paid on time. The deposit is used just in case the account went to collections and was charged off. An advantage is that the credit line can be increased by adding to the deposit. So, you can think of this as building credit with a savings account. The more you add to the deposit, the higher the limit, and the better it looks on your report to have a high limit, since having high limits vs. a low balances are the 2nd most important factor of your credit. Keep in mind that as long as you pay on time and keep a low, if not 0 balance on the card, usually after a year or year & a 1/2, the card either converts to a regular card or a better card is offered and most importantly, you get the deposit back with interest attached. So in truth, you've used your own moey to build your credit. My suggestion would be to open 2 of these up and that's it as far as major credit cards are concerned. After successfully opening up 2 secured cards, you should be able to open up a department store card without too many problems.

Another option would be to take out a small personal loan and use what's in your savings account as collateral. Then take the money that's borrowed and place that into a certificate of deposit with a term that's slightly shorter than the term of the loan. This way, you're gaining interest on the money you're building credit with. Also, it insures that you'll be able to repay the loan either with the savings account as collateral or the proceeds from the loan as a certificate of deposit. The average length of time that you would want to take out this loan would be about 6 months to a year. This would be considered as an installment loan which is just as important as having a couple of credit cards. It's important to have a good balance of revolving (credit cards) and installment (personal, auto, furniture, applicance, car, & student loans) accounts. Hopefully this answer will help you out


Good Luck!

Answer 2

The best way to get a good credit score is to be responsible about money.

Everyone has times when circumstances beyond their control make it impossible to pay their bills on time. Being responsible means contacting your creditors, letting them know, making arrangements and then keeping that commitment.

You might think that paying off your bills early would help your credit score more, but apparently that is not the case. I learned that by experience--it didn't hurt my credit, it just didn't help it.

If you can finance a purchase, say something around $1,000 and then pay it off monthly, perfectly on time, this is the sort of thing that will build your credit score. Make arrangements to have the bill automatically paid out of your bank account, and leave a good margin between payday and the day the payment is to be made.

This will allow you time to make arrangements, stop the payment, or borrow a little something from family or friends in the event that your paycheck is late, you lose your job or something unexpected happens.

The last thing you want--and therefore what you must avoid at all costs--is overdrafts because you did not stop an automatic payment you could not make. In some states, a couple of those will land you in jail!

So, a routine where you don't bounce checks, pay your bills regularly (including rent, utilities, doctors, etc., because they all report to the credit bureau!), and do so over a period of a couple of years is solid proof that you can be trusted with a larger loan, say for a car or a house.

Answer 3

Find something you like at an appliance store that has these 12-24 month no interest loans. Say, get a low cost LCD TV, $500-$1000. or a freezer. or washer/dryer. Check prices, get the best deal, WAIT for sales, this economy will have them dropping prices sooner than Christmas.

You must prove your residence, so they can repo if you fail.
You must prove your employment.

Pay this off - YOU MUST DIVIDE THE TOTAL COST by the months of no interest - Pay off the account within the time frame, AT LARGER PAYMENTS than the CONTRACT specifies. ELSE, you get hit with that interest at the smaller payment, because you have not paid this off. Extra money

The length of payments will be reported that you are paying on new account. SHOP for the best prices!

Buy only used cars, or try to pay cash for all purchases. Then, save money for a large Down payment on housing, for lower interest rates.

This 2nd or 3rd "false" economy night create good buys on foreclosures in a couple months. Defense Spending in the '80's, the computer boom in the '90's were unsustainable markets, that reached saturation points (computers) or reduction of spending (Military).
The US economy is slowing because autos cost too much relative to available choices for lower incomes, and those auto workers who financed 2 houses cannot pay for them.

Out of work, they voted Democrat in 2006.

Rising taxes and saturated housing markets have caused the slowdown now - military spending is propping the US up again, barely. Wait till the troops leave Iraq - will you have a job? Oil will not fall below $60 again, good for drillers.

SAVE money. spend less.

Answer 4

Call your current creditors and make some arrangements. Here's some examples:
1) If you have personal loans, call them and see if they can adjust your terms, i.e. lower your interest or payment even maybe both, to make it easier to pay it off. If they can offer you a settlement, DO NOT let them forgive you more than $600. If you do, then you'll have to file a 1099A form and pay that back with your taxes.
2) If you have credit cards, don't just give the minimum. Even if you give like $10 more than your minimum, you're already $10 ahead.
3) If you have a habit of using credit cards, freeze them. Put them in a container with water and freeze them. This will not harm them, but this will make you work to take them out of the ice. Only take them out for extreme emergency.
4) Try to stay away from running your credit. One inquiry will not do much, but multiple ones will. Each one drops it a couple of point for multiple inquiries.
5) Take any extra hours you can. Use the extra money to apply more to your loans, cards, etc.

Hope this helps...

Answer 5

If you want to rebuild your credit, start by paying existing debts on time and making at least the minimum payment. Lenders report to the 3 major credit reporting agencies every 30 days, so if you pay on time for several months, that will have a positive impact on your score.

In your area, there may be a local finance company (like Household Finance, or something like that) that is willing to make small personal loans to help rebuild credit. My sister did this to rebuild her credit. She borrowed $500 and paid on it timely. It definitely added a positive credit reference for her, and that helped raise her score.

Good luck!

Answer 6

Do not worry. The time will turn again. Be very much patient until the problem crosses over.
Cut all your expenses to the least. Stop outing,shopping etc. First pay off your debts one by one, and close the high cost loans first. After some time you will find that you are comfortable. Then stop taking any loans.
Do some part time jobs like Insurance agency or financial advisor jobs where you donot loose anything and if you get customers you will be paid
Believe in God and not in Astrologers to get remedies by spending more.

God bless you to recover soon.
good luck
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Answer 7

Pay your current debts on time. As the old debts age, they will count less against you.