It is best that you start your credit rebuilding efforts right before you have your bankruptcy discharged. Pull your credit report and look at all of the accounts that are included in your bankruptcy. Make sure all trade lines say “Included in BK.” They should also reflect a zero balance.
What companies do not report to the credit bureaus?
Some travel entertainment companies, gasoline companies, local retailers, catalog retailers, prepaid card venders, and credit unions are among those creditors who don’t report. When checking out lenders to apply with, call them up or research them on the Internet. Find out what credit bureaus they report to. You want them to report to all three, but it’s not set in stone. If they report to just one, then that’s good enough for you to start the rebuilding process.
How often should I use my credit card?
Creditors like to see that you can make your payments on time, so if you have a credit card, use it to buy small items, and pay off the balance to avoid monthly interest fees.
What do you mean by “show the positive”?
When applying for credit, emphasize why the credit should be granted. It is important to capitalize on your strong points by making them the focus of your credit strategy. A good income history is one of the strongest points you can make. An excellent track record with credit bureaus, with your banking institution, and with creditors (such as the telephone company and utilities) goes a long way toward making you look good. Lenders like to see evidence of earning power over a long period of time, as well as a consistent record of making payments on time.
Why should I educate myself?
The credit repair system is extremely intricate and is constantly changing. Every year, millions of Americans suffer from bad credit and get themselves deeper into debt. To guard yourself against costly mistakes, I encourage you to read as many books as you can on credit repair and personal finance so that you can learn the various ways to improve your credit.
How do I stay out of trouble?
When rebuilding credit, you want to strictly limit the amount of credit you apply for. Shop for deals on the best credit cards or loans out there. Get credit for a specific purpose and not just to have it. By keeping the limits low and limiting the amount of credit you obtain, it will be easier for you to make your payments on time and keep your limits reduced. This is how you build your credit step-by-step.
How can I buy a house with no credit or poor credit?
Most banks will not lend to you while you are trying to rebuild your credit, but there are two secret ways you can buy a house with bad credit. The first is by buying owner-financed homes. Some homeowners are willing to finance their homes without a credit check, as they are acting as the bank. Second, you can rent to own. Put down a large down payment and establish a leasing agreement with the owner. In this contract, you agree to pay the landlord monthly payments for up to two years. When the agreement is over, you will have the option of buying the home or moving out. If you decide to buy, your credit will be solid by this time, and you can go back to the bank for a loan.
If I buy a car, will it help me build credit?
Yes. Most major cities have car dealers who offer bad-credit car loans. They do come with a price though, entailing a large down payment and a high interest rate. Before you sign the loan agreement, make sure the dealership reports your payment history to the credit bureaus. Look at used car dealers who will finance cars with no credit as long as you have a good job and a down payment.
Why should I monitor my credit reports?
During the rebuilding stages, it’s important that you check your credit reports every four months for inaccurate information that might damage your credit. Common errors to look for are:
What are the benefits of joining a credit union?
These banks have better rates on credit cards, car loans, and personal loans. Their qualification requirements are less strict, they are more forgiving than banks, and people with bankruptcies may qualify for their loans. They also have better customer service skills. When looking for a credit union, ask your current employer or school, or search the Internet or yellow pages.
As you can see, rebuilding your credit takes time and requires a lot of work, but it is well worth it in the long run. Just imagine at one point in your life when you were not able to get approved for anything, but now after your rebuilding efforts, you can get almost anything. (Good feeling, right?)