Rebuilding Your Credit
I really doesn`t matter whether you are trying to establish new credit or if you are trying to rebuild your credit score after a rocky spell, the following rules will explain what you need to do to rebuild your credit score. much the same:
Rule 1: Check your credit report at all three major credit bureaus
When you receive your report make sure you scan it closely for errors and information that is outdated that will cause your credit report to be lower than it should be. United States Federal law allows you to file for a free report from each of the three major bureaus one time per year. To get your reports simply call 877-322-8228 or visit www.AnnualCreditReport.com. Even if you never established a credit report be warned, you might just have a credit report under your name already. Somebody else`s information could have inadvertently been included in your credit report file, or you might be a victim of identity theft which is on the rise. After you look over your report in detail the next thing you will have to do is start to clear up erroneous marks on it before applying for new accounts.
Rule 2: Set up a savings account as well as a new checking account
Your potential bank loan lenders will see these accounts and view them as a sign of financial stability. There are sites online that allow you to see if you have been blacklisted by any banks, you can do this by searching on Google or Yahoo. If you are blacklisted you will need to find a list of institutions that don`t use the system and that may allow you to open a new account.
Rule 3: Apply for the right credit cards
Most all college students with no credit history will find out that there is deffinitely no time in there life when it will be easier to get a regular, unsecured credit card such as a Visa or MasterCard. An unsecured credit card is one that does not require a deposit to get. Most credit card companies are willing to take chances on students because they know the parents are probably willing to bail out there children when they are in college.
Don`t get carried away. Do not get more than two low interest rate credit cards that are no-fee cards. You can use them but only for small purchases that you can pay off in full monthly.
If you apply and get denied for a regular no fee credit card, you can try appling for a secured credit card. Your credit card maximum limit will be determined by the amount of cash you deposit to open the card. You can typically deposit $200 to $1,000.
Look for the best deals: Make sure you do not apply for cards that ask for upfront fees. Find a card that will periodically report to all three credit bureaus and that will automatically convert to an unsecured card after 12 to 18 months after you prove you are financially responible. Some of you can go to your local credit union to start, or check out Bankrate.com`s list of secured card issuers. Fuel cards and department store cards are also an option. Remember though two open credit cards is enough to do the job at hand. These cards don`t help your credit as much as a bank card (Visa, MasterCard, Discover, and so on), but they`re usually easier to get.
Rule 4: Try asking a friend or relative if they will sign on with you as a cosigner
You may be able to build your credit faster if you can convince someone with good credit to add you as a joint user on a credit card. Being a joint user means that the other person`s history with that account is typically imported to your credit report. Find a cosigner to help you get a loan, which in turn will help build your credit history. If you don`t pay, however, your cosigner`s credit will suffer.
Rule 5: Get an installment loan
To get the best credit score, you need both revolving accounts (credit cards, lines of credit) and installment accounts (auto loans, personal loans, mortgages). Most credit unions are a good choice to start with. If you start with an auto loan, it is highly recommended that you make a large down payment, in the future you can refinance when your credit has improved.
Rule 6: Safe credit practices
Try not to be tempted to simply toss all your credit cards into your dresser drawer. In order to build credit you need to regularly use your credit cards, just do so responsibly! Do not get sucked back into bad habits like charging more than you know you can afford every month. Do not use more than 30% of the credit card`s limit, this can jump your interest rate up to the next level. You do not have to have 10 different credit cards to build credit. A few cards are all you need to build your credit score back up.