A credit history is a reflection of the creditworthiness of an individual, showing whether payments are made in full and on time for the duration of the credit agreement contract. Unfortunately, loss of a job or a reduction in income can cause damage to a credit history, reducing the number of "points" on the credit record every time a payment is missed or late. A damaged credit history can be repaired, even if a bankruptcy was filed. Although a bankruptcy will appear on a credit record for up to seven years, repair can begin immediately whatever the cause.
Obtain your credit report and scan the data for any errors, such as accounts you paid off long ago yet still show a more recent delinquent date, accounts you are sure you never had, or any other errors. If any are found, follow the requirements necessary for challenging an entry through the reporting bureau from whom you received the report.
Pay off any outstanding debt. If necessary, attempt to procure a second part-time job alongside the primary job to generate extra funds for debt payoff. Any outstanding debt will continue to damage a credit history even while attempting to rebuild it, making any attempts to repair irrelevant. Establish a budget to help in freeing up money to use for this purpose.
Save up a minimum of $500, which can be used to open a savings account with any bank who offers VISA or MasterCard secured credit cards.
Choose a bank that offers secured credit cards and file an application to open a savings account. Banks who have traditionally offered secured credit cards are Wells Fargo, Orchard Bank and Bank of America. Deposit requirements vary between $300 and $1,000. Once the funds are deposited in the savings account, they may only be accessed via the secured credit card provided at sign-up.
Purchase between $50 and $100 worth of goods or services on the new secured credit card, trying not to spend more than that each month onto the card, as credit companies frown on consistently high balances.
Pay off at least half of what is on the card every single month when the payment statement arrives, but strive to pay off the full balance if possible. Always have payments made in advance of the delinquency date, as even one late payment will be reported to the credit reporting bureaus. Both positive and negative reports are made to these bureaus every single month, and the more positive entries in your name, the more positive credit points are awarded to you.
Never pay less than the minimum payment amount or miss a payment. Rebuilding a credit history requires consistent punctuality and commitment to succeed.
There may be annual fees which some banks will charge for the use of secured credit cards, and balances on such cards accrue interest every month just like an unsecured credit card. Be certain to read the terms of service agreement, before signing up, to make sure you are able to agree to such fees and interest
- Never pay less than the minimum payment amount or miss a payment. Rebuilding a credit history requires consistent punctuality and commitment to succeed.
- There may be annual fees which some banks will charge for the use of secured credit cards, and balances on such cards accrue interest every month just like an unsecured credit card. Be certain to read the terms of service agreement, before signing up, to make sure you are able to agree to such fees and interest
Kurt Schanaman has had several editorials printed by the Star-Herald Newspaper publication in Western Nebraska. He attended Western Nebraska Community College.