Resources for people with Bad Credit & information on Credit Reports, Debt Consolidation, Auto Loans, Mortgages, & more.

Reestablish Bad Credit Resource Guide

How to Reestablish Your Credit

Reestablishing your credit can be a long process, it can take 18 months or more. You need to spend this time working hard to prove you have control of your spending and that you are a good credit risk.

The following steps can help you to reestablish your credit:

1. Pay all of your bills on time. Once you miss a credit card payment, this can create not only a late fee but an interest rate hike as well. After 30 days they may report your late payment to the credit bureaus. Then, if other lenders happen to take a look at your file, which they do from time to time, they also may decide to raise your rate.

2. Pay off outstanding credit card balances and reduce the amount of credit cards you have to one or two. Request in writing that your accounts are to be closed.

3. Open a secured credit card account if you can't open a regular card. A secured card is a credit card that requires you to open and maintain a savings account as security for your line of credit. Paying off the balance monthly can show you are responsible financially.

4. Apply for a credit card at a local store or gas station. Usually these are easy to obtain. Use one of these cards to purchase something and pay on time.

5. Obtain a free credit report from all three credit reporting agencies. Review each one carefully and dispute any errors you see.

6. Open a savings account and make deposits consistently.

7. Request that your credit limits on any accounts you have be lowered. Lenders consider the total amount of credit that is available to you even if you are not using it.

8. Live within your limits. The best way to do this is to use 30% or less of your available credit. Using more than 70% would be a serious drain on your score. To reduce the percentage that you are using now, you must try to pay down what you have already borrowed.

9. Put off any large purchases 60 days before you apply for a loan. If your lender reports your information to the bureaus, and you happen to have just made a large purchase and it is just before you paid the bill, your score will suffer.