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How can I re-build my credit?

Myself and my husband's credit is not the greatest. Nothing major, but when we first got married we didn't have a lot of money so our credit cards didn't get paid on time and went into collections. We had 2 each, and even though all 4 are completely paid off now and were settled, it still remains on our credit. How can we re-build it since we don't have good enough credit to even apply for a credit card to build it back up??

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Asked by Anonymous at 10:54 AM on Jun. 19, 2010 in Money & Work

Answers (5)
  • It takes seven years for bad credit to be removed from your credit report. You can always apply for a SMALL store card. That is what I have done to work on my credit. I have a Target card to help work things back up. But it will still be 2017 before the bad things are taken off of my credit report.

    Answer by PhoenixFire at 10:58 AM on Jun. 19, 2010

  • When you paid off your credit cards, you should request the accounts be closed and a letter stating so, sent for your records. Even though you have $0 balances, the fact that you have a line of credit actually lowers your credit score--you're seen as more "at risk" for spending.

    I recommend having 1 major joint credit card and 1 joint Visa debit/bank card. I recommend obtaining an American Express card, as there are NO interest rates, and you HAVE to pay off the balance each month. If you don't you are not penalized, your account is simply frozen until you pay it off! Amex is widely accepted--including gas stations, but wherever it is not accepted, you can just use your Visa Bank Card--which you use like a Visa, yet the money is IMMEDIATELY taken from your checking account. Again, preventing you from overspending.

    Cut up/close ALL retail store cards and use only the two cards above. Your credit score will rebound quickly!

    Answer by LoriKeet at 11:06 AM on Jun. 19, 2010

  • Also make sure you ALWAYS pay your rent/mortgage and utilities FIRST--they are "graded" with more weight! If you have adequate equity you MIGHT be able to roll all of your outstanding credit card balances into ONE payment, thereby paying less in interest rates and allowing you to pay down the principle not just paying interest.

    Store cards can NOW chage as much as 30% interest!! They are the WORST credit card to have! The ONLY time I have opened a store card was to get a significant percentage off (in addition to sale prices and coupons), and ONLY if I planned on making a significant purchase--then I promptly pay off the balance, cut up the card and close the account. Otherwise, all of that savings you got on great sale items goes right out the window with your first statement and the interest rate added in! :o(

    Answer by LoriKeet at 11:10 AM on Jun. 19, 2010

  • If you do not want to have a store credit card (their interest rates are extreme) you can apply for a secure credit card. This is a card that you put down the money first and then they lend you up to that amount of money. It is a pain but will allow you to repair your credit. If you don't have a couple hundred to do that with maybe do it when you get your tax return. Opening and quickly closing store credit cards can hurt your credit, so don't do it unless you are going to keep it open for at least a year. You don't have to use it, just let it sit, but keep it open.

    Answer by CorrinaWithrow at 11:17 AM on Jun. 19, 2010

  • LoriKeet, all of the accounts were closed and we have confirmation of each. However, we cannot apply for any other cards because of our credit score. As of right now, we do not have any, we just use our debit cards and cash only. The only cards we would probably be able to get are the ones for bad credit that cost an arm and a leg with fees everywhere...

    Answer by Anonymous at 12:29 PM on Jun. 19, 2010

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