Let’s talk about how to rebuild credit.

You know, sometimes life throws you some big whammy’s and makes it impossible to pay your debts.  After you miss enough payments your creditors will surely start getting aggressive in their tactics to ascertain payments from you.  The average credit score in the US is 687. If you start missing payments your score will start plummeting and eventually if you just can’t pay your creditors you may need to negotiate directly with them for lower payments or possibly even lower principal.  If that doesn’t work you may want to consider bankruptcy Chapter 7.  Chapter 7 is designed to relieve you of your debt burden and give you a fresh start.  It will demolish your credit score but the great thing is that you can start improving your credit score shortly after.

How to fix bad credit?

In order to fix bad credit you may think you need swear off credit cards for good.  However, rebuilding credit with a very small credit limit line credit card is a great start.  If you just can’t get one then you can go to most local banks and get a pre-paid, secured, credit card.  For example, you give a bank $100. The bank in turn will give you a credit card with a $100 limit.  If you don’t pay they will take funds from the $100 you gave them to pay off your bill.  The great thing about this scenario is that it will be reported on your credit history positively and start you on your way to credit repair.

Get a Co-Signer

You may be asking yourself if there is any other ways to fix my credit.  If you have someone in your life who believes in you then you may want to consider purchasing something on credit with a co-signer.  Or they could co-sign on a credit card. With each payment you will be building your credit score.  More positive open accounts will help your credit history and get you back to those high credit scores or at least get you going in the right direction.

Mistakes on Your Credit Report

It’s amazing to think about this considering how important our credit reports are to our financial lives but it has been reported that 5-25% of all consumers have some error on their credit reports.  Some of those errors are so substantial that they can have a dramatic impact on your credit score which in turn can make it so that you will have to pay higher interest rates if you are in the market for credit.

Maintaining your credit

Now that you’ve come out the other side of a tough financial time and you’re back on your feet you’ll want to not only grow your credit score but also make sure you are maintaining it.

Credit to Payoff Limits

If you must revolve your credit cards it’s best to not use more than 30% of your credit limits.  By staying at 30% or below your credit score should remain in a good position.

Pay On Time

It may sound obvious but paying on time is the best way to keep your status in good standing.  If you can pay off your balances before you start revolving your debt so you don’t incur any interest charges.

Credit Cards for Good Credit

Once you’ve got your credit score back up there are a plethora of great 0% offers currently for people with great credit.

To your everlasting wealth!