How do you rebuild credit?

[DreamWeaver]

I have poor credit according to Experian. I had a Capitol One card in 1998 and didn't pay it till 2002. I also had an Express card that I paid off around the same time. The only bill I have in my name is cable. I've recently tried to get a Discover and a Macy's card but was denied. If I can't get a card or utilities in my name how am I ever supposed to get good credit? Is there ANY card they'll give me? I swear I'll pay it!

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[Reephdweller]

Probably one of the best sites that have helped me to understand this a little better is MyFico (http://www.myfico.com/), I was getting rejected left and right as well (and probably still will at this point), from the credit card companies. However what this thing does is give you your credit score. It gives you lots of helpful information, a hell of a lot more than Experian and the others give you. Plus they'll give you the reports from all the credit bureaus. I cleared up a lot of incorrect information in my credit report because it listed a number of accounts that I had opened well over ten years ago but never closed or were never properly closed by the stores.

I believe my credit score is likely much better than it was over a year ago. The basic key is go at least 6 or more months without opening another account, this allows time for your credit score to increase. The higher score you get the better.

Plus you want to keep whatever balances you have on existing credit cards below the credit limit. If you can keep them very low, or $500 or more below the limit I believe that also works in your favor. Having a lot of credit accounts open hurts your score, as well as having late payments, and non-payments listed hurt you as well.

I should actually compare it, from when I last tried it to now. I'm sure my credit score is much better than it was. However I'm still working on my balances on existing accounts. I also reduced my credit cards down to 3, one regular credit card, and 2 store credit cards. The less cards you have supposedly the better. Though you don't have to have it as extreme as I have it. I believe having 2 or 3 credit cards, as well as 2 or 3 store credit cards is about the norm.

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[TheMojoPin]

Wait, what do you mean you "didn't pay it until 2002?"

Because I've had a credit card that I've never paid below $500 since 1999, and my credit keeps going up, and I keep getting credit card offers with obscene amounts of credit...I thought this meant I had GOOD credit, and now I'm all a-scared and stuff.

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[DreamWeaver]

I got a credit card in 1998. I charged stuff on it for a year and only paid it maybe twice. It ended up going to a collection agency and I ignored it thinking it would go away. Unfurtunatly it never did. In 2002 I worked out a deal with them to pay half to resolve it. And now I'm f'ed.

Can't I just tell them that I was young, poor and stupid and I'm really sorry and I promise to pay this time? I'll even offer favors of any kind. Just give me a credit card!!!

Thanks for the advice reefy. Everything is paid off so now I sit and wait 7 years I guess.

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[wilee]

Actually, you should look into secured credit cards. You give them a balance up front that covers the entire credit limit (e.g. $500) and you pay it just like a regular credit card. If you screw up, they have your money that you used to secure the card so they don't lose out. Use one of those for a few months to a year and that should help you (assuming you don't miss any payments).

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[angrymissy]

www.creditboards.com has a lot of good info on how to fix your credit and who will give you a card

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[Bama]

Marry someone with good credit. It worked wonders for me.

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[curtoid]

I had very, very, VERY bad credit. I had numerous cards, and eventually things got so bad I had to wrap the whole thing into a consumer credit agency, where I pay off one lump sum.

Sloooooowly, I began rebuilding the credit; it's not perfect, but it is much better.

* First thing I did was take up the offer of a secure card from CapitalOne. It was a measily credit limit, but it was a start. DO NOT keep applying for credit cards; those rejections show up as black marks on your report. IF YOU CAN, you should (at some point) also apply for a check card through your bank.

* Next: I got a car. The thing about cars, is that they will give them to ANYONE, even with bad credit - you just have to be able to to make payments, etc. If you have access to a credit union, at some point have them take over as lean holder on the car. Trust me - nothing helps build bad credit up more than buying a car, and sticking to the payments.

* Get copies of your credit report, and dispute everything!!! You can get a copy of your report through any one of another companies out there, but you will have to send letters outlining what you think is wrong to three different credit agencies. In some cases, you may not realize that you have cards or accounts that are still open.

* When it's time to apply for other cards again, do NOT apply for Department Store or Gas Station cards!!!

In an ideal world you should only have two or three of these kinds of cards...

+ AMERICAN EXPRESS GREEN CARD - Gets you in the habit of paying off everything each month

+ VISA CHECK CARD THROUGH YOUR BANK - Ditto

+ A VISA OR MASTERCARD WITH A LOW INTEREST RATE - Do your homework; again, if you can get one through a credit union, do it.

It takes about 7 years for things to fall off your report, so just know that stuff like not paying your balance for a number of years, and letting it go to collections, will really trip you up down the road - you already know it, though.



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[Recyclerz]

Motley Fool Credit Center (http://www.fool.com/ccc/ccc.htm?source=PFinAg)
This site should answer all the questions you have and some you haven't thought of yet!

All of the advice above is pretty sound, but I'll take exception to one of Curtoid's points - dispute only those parts of your credit report that aren't actually true. There used to be a shady short cut where if you sent three letters to a credit agency disputing a "ding" on your report and they didn't send you an answer within a certain number of days they had to take it off. They tightened up on these rules (as well as the debts you could walk away from with a personal bankruptcy filing).


I'll even offer favors of any kind. Just give me a credit card!!!


You mean party favors like those li'l pointy hats and the noise-makers?!? Why, you can use my AMEX. ;)



[b]There ain't no asylum here.
King Solomon he never lived 'round here.[b]

[Alice S. Fuzzybutt]

Gina, my only advice (other than the sage words you have already been given) is to pay credit cards and utilities on time, if not early.

I paid off a car loan and my student loan early. I think that's a major reason why I have good credit.

Good luck!!!!!!

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