How to Rebuild Your Credit

Making mistakes is a part of being human, and money and finance are no exceptions. Problems with money and debt are not limited to class or race. Everyone makes mistakes and occasionally ruins their credit. Employers and landlords using credit checks to discriminate between applicants are part of a growing trend. This is unfortunate for people trying to rebuild credit. Rebuilding your credit is not only possible but probable. The steps you have to take are simple. However, they require diligence and dedication to work.

Clean Up Your Credit Report

Nothing stays on your credit report forever. Even bankruptcies disappear after 7 or 10 years, depending on the type of chapter the debtor files. Get a copy of your credit report and look for errors and incorrect information. Contact the credit bureau, preferably by letter. Inform them of the errors in extreme detail. The credit bureau will probably provide a form that you can fill out, so writing the letter may not be necessary.

After providing the bureau with notification of all the incorrect information, the bureau is required by law to investigate each of them and report back to you within 30 days. Should the credit bureau determine that you are in the right, or that the original creditor cannot verify the information, the bureau must correct the report. This may entail removing the information or modifying it.

On the other hand, if the bureau replies and says the information is correct, discuss the problem directly with the bureau. If that doesn’t go anywhere, try contacting your creditors and ask them to modify or remove the information. Creditors are legally prohibited from knowingly reporting information that conflicts with information in their possession, or from knowingly reporting incorrect information after they learn it is incorrect.

Use Credit To Rebuild Credit

This saying is true. The best way to rebuild credit is to open new credit card accounts and use them responsibly. Since unsecured credit is likely unavailable at this point, start over by using secured credit. A secured credit card is your best bet to rebuild your credit rating.

When you open an account, you are required to deposit a sum of cash with the credit card company. This sum becomes your credit limit. If you default, the credit card company can seize the deposit. Some secured credit card companies rely on underhanded tactics to essentially extort money from their customers. Do your homework and find a company offering credit cards that is customer-friendly.

Rebuild with Secured Credit

Secured credit cards help get you to the point where you will start getting offers of unsecured credit once more. You may find it beneficial to continue using secured credit cards for the foreseeable future. Keep in mind that creditors are likely to rate you as “subprime.” Consequently, the interest rate on your card will be higher. As you build up a history of using credit wisely, your credit rating will eventually rise. The keys are responsibility and stability. Creditors like knowing you are accountable and trustworthy. ¬†Another method of protection is term life insurance quotes. ¬†You should always cover your bases and the rest will cover itself!

(Richard Towler has a background in finance and economics which led him to create a network of consumer finance comparison websites including Secured Credit Cards 4U in the USA and Australia to help consumers find the right credit cards for their needs.)