Pay your bills.

Yes, it’s possible to fix your credit yourself. With a little hard work and perserverance, and patience, you could get it back up there. What you have to understand is what makes up your credit score:

1. Payment history- 35%
2. Total debt owed to avialable credit ratio-30%
3. Length of time establishing credit-15%
4. Types of credit established-10%
5. Inquiries and New accounts-10%

With that in mind, this is some steps that you should do in order to get yourself in a better financial position to rebuild your score:

1. Open a checking and savings account if you haven’t already. While this won’t directly affect your credit score, it does many things. It re-establishes a relationship between you and a financial institution, which by being an customer in good standing, could help make it easier to get approved for credit cards and loans. Most importantly, by opening a checking account
it gives you the single most powerful tool in building credit, to help pay your bills on time, especially if the bank offers online billpay.

2. Gather ALL your credit reports- It’s important to know exactly what’s on your reports. A lot of times, people believe that their credit is so bad, that they don’t bother to check their reports for mistakes, and trust me, mistakes DO happen. The credit bureaus don’t get paid to be accurate, they get paid to report. It’s important that you gather reports from all 3 agencies to determine not just who and how much you owe, but to make sure that what’s on there is even correct. If you do happen to find something that you’re sure is not right, you should dispute with all 3 agencies, they all have an online dispute feature in which you can dispute the item. Once you’ve made sure that there’s no inaccuracies on your report, then you should arrange your debts from most recent and lowest amount to oldest and highest amount. Debts that are newer than 2 years are hurting your score the worst and should be handled first. What you should know that just paying off debts, especially collection debts will not help your score. A “pay to delete” or “deletion payment”, which is a payment in exchange for removing it from your report completely. I posted several links that explains this more in detail.

If you’re sucuessful, this will help your score.

3. Open new credit- I had mentioned in #1, about opening a checking and savings account with a bank or credit union, I’m going to tie that in with what I’m about to say. Some major banks (Bank of America, Wells Fargo, USBank, Orchard Bank) and some credit unions offer secured credit cards, which are credit cards that require a deposit to establish credit. Whatever you deposit would be the credit line, for example, if you deposited $300, then your credit line would be $300. The deposit isn’t used to pay for what’s purchased on the card, you would still need to either pay in full or make monthly minimum payments. The deposit is used only if the account becomes delinquent and goes to collections. A couple of good things is that you can increase the credit limit by adding to the deposit, which can help your score because it creates a much needed cushion between the total debt that’s owed and the available credit, and also the deposit is sometimes linked to a savings account which earns interest while you’re building credit, so the deposit isn’t just sitting there. A good way to build credit with the card is to make small purchases ($20/month max) and pay it off on time every month, while adding to the deposit. Usually after a year or so, of paying it off on time, the card either converts to a regular card or it’s upgraded to a better card, and most importantly the deposit isn’t needed anymore and it’s given back. My suggestion would be to open another secured card and repeat the process or open 2 at a time, which would speed things up. If you make small purchases, pay it off and increase the limits, that will really help your score. In the end, you’ll have 2 credit cards with decent limits and an emergency fund from the deposits. Since you already have some CC’s you’re paying on, you should be ok on this.

4. Enroll with PRBC- PRBC is America’s Alternative Credit Bureau, providing a helpful service to the over 50 million people with limited or no credit history. If you pay your monthly bills on time, PRBC can help you build credit to qualify for a mortgage and better interest rates.On-time payments for the following bills are not reported to the traditional credit bureaus:

Rent
Cable
Phone
Daycare
Insurance
Electric
Natural Gas
Cell Phone

The only time your payments for these bills are reported to the other credit bureaus is if they’re missing or late.With PRBC, your on-time payments count. You build credit for paying your bills on time, even if you have no credit history. PRBC offers two simple ways to start building credit today.

In closing, just a few more things to keep in mind.

-Don’t spend more than 30% of your combined available credit on all your cards.

-Only apply for credit when necessary.

-Pay on time

Hope this helps…

Thanks for reading and…

Good luck!

I guess, If Im real creative I can see where the last answer is coming from, but you can have a great credit score with no debt.

Because you have a credit card doesnt mean you have to constantly borrow on it.

If you do not have credit, you will never own a home unless you pay cash….lets be realistic about that one.

The best way to improve your score is to of course, pay your bills not only on time, but before the closing date.

Secondly, keep your balance to limit ration as low as possible. The only time you really have to use a card is at least every 6 months, or else it will be closed due to lack of activity.

Fill your tank every six months….thats a manageable amount if debt I would think