Having problems re-establishing my credit?

Hello, I am 27 years old and have problems re-establishing my credit. When I was younger I had problems managing credit. I really did not understand the consequences of how credit can affect your life. Currently I have a lot charge-offs on credit cards I use to have 3 years ago. They total about 2000. I have graduated from college and have good job, that will allow me to clear up a lot of negative credit. But thoses negative items already affected my credit score. Now I am in a situation where my finances allows me to purchase things like a house and car, but my credit score is below 500. So can someone please give me some advice on how to rebuild my credit score, and allow me to purchase me a home?

Well, let me be the first to tell you that it's not the end of the world. With the current situation with mortgages nad lending in general, you may not want to jump right into anything right now. It is important to get you back on the right track in the meanwhile.

It does help to know what makes up your score so you know what you're working with:

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

Having said that, now let's continue with the battle plan, shall we?

The first things that you need to do is open a checking and savings account. While opening the accounts alone will not directly improve your score, it does put you in a better position to get yourself out. What this does is build a relationship with a bank and as time goes on you could become a preferred customer and opportunities for credit will become more available to you. Also it can also help you get approved for a secured credit card, which I'll discuss a little later.

Next, gather all your reports if you haven't done it already, and round up all the charge-offs. This is what's killing you and the sooner you can rid yourself of these, the better. I'm posting a link that explains how to negotiate to hopefully get those charge offs removed.

http://www.creditinfocenter.com/debt/settle_debts.shtml

http://www.creditinfocenter.com/debt/neg_rating_after_settle.shtml

http://www.creditinfocenter.com/debt/CanCreditorSue4SettlementDifferences.shtml

http://www.creditinfocenter.com/debt/ActualDebtSuccesses.shtml

I suggest checking out the website to try to get those collections not only paid, but for a lower amount, plus getting it removed from your report altogether.

If you're successful in getting those charge offs paid and hopefully removed from your report, then it's important to start building positive credit to start rasing your score. Now one might think it would be satisfied to apply for a low limit credit card and make payments on it, well to tell you the truth, it does work but it's not that effective. Especially in your situation, it will be hard pressed to get approved, so that's where a secured card comes in handy. A secured card not only allows you to build credit for yourself, but also a way to build a savings as well. How it works is that a deposit is placed upfront usually in a savings account or certificate of deposit which is then used as collateral to establish a line of credit . For example, you deposit $250, usually you get a $250 credit line. Now the deposit is used only for collateral so it will not pay the minimum payment or the balance owed, but it does gain interest while you're building credit. Also you're allowed to make additional deposits in order to increase the credit line. Since the amount of debt you owe vs. your available credit makes up 30% of your score, the more you deposit to increase the credit line, the better it looks on your credit when it reports because of the high limit. Keep in mind that the deposit is an investment, not just for your credit, but for a rainy day fund. A good practice on managing the card would be to make small purchases ($20-50/month) that could be paid off on time every month. Once again it helps to boost that limit up by adding to the deposit to get the limit as high as possible. Usually after a year of keeping the balance low, if not at 0 and paying on time, either the card converts to a regular card or a better card is offered, and most importantly your deposit isn't needed as collateral anymore and it's given back to you. So you would end up with unsecured credit card that you probably never would've been approved for had you applied on your own, AND you saved up a nice nest egg. By this time offers of other credit may come, and you may get approved for other cards. In my opinion, I would just open another secured card and repeat the process where you started off with the last card. This way, you have 2 cards with high limits and you can increase the credit line by adding even more to your savings.

One thing that you can do is 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.

Well, I hope that the information I've provdided will help you out some, I think it will...

Good Luck!

Basically those charge- offs will be on your credit for about 5-7 years no matter what. You can either pay those off and they still will show delinquent but payed off which is better then still past due. Basically after that you will have to ask yourself: are you ready? If so get a credit card and never let it get past due. The little things effect your credit more. Credit cards build credit up fast.Ifyour credit is below 500 you still stand a change with getting a house but your APR will be sky- high.

Now that you are established in your career, you can call all of your creditors and work out a program to pay off those charge-offs. In my personal case, I even had citibank re-extend me credit after i paid them off. It just takes a lot of phone calls and letters, but once you pay the charge-offs, you are on your way.

Mike

what you can do is pay all bills off and keep payments on time

I was the same way in my 20s. When I turned 30, I bought house and the mortgage company did a credit check and told me what I HAD to pay off before I could get a loan (there was $500-$600 worth of old bills and stuff.) There was also a lot of old debts that I was able to write a letter explaining why I was unable to pay, instead of having to pay them.

Home ownership does wonders for your credit. I have almost a 700 score now.

Also, just making regular payments on your credit cards helps your credit, in time they'll stop looking at how you USE to manage your finances and how you do NOW.

i would suggest gettin a small credit limit credit card and work on paying that back, its gonna be a high interest rate so be prepared. also purchase something small that you will need to pay notes on. like a piece of jewelry or furniture. doesnt have to be big, can be a $100 watch or so. just so you are establishing some pos credit. i am in the process of doing the same thing. be aware that there are 2 kinds of positive credit. "credit card type" and "installment type" its gonna take a while (at least 30 days after your first payment for them to report it) but the pay off will be worth it. also know that paying even 1 day late shows as a late payment. good luck and hope you get that house.!

Follow these simple guidelines to help restore and improve your credit score.

First, make sure all the information on your credit report is accurate.

Second, try to pay off all or any accounts that are currently in collections or make payment arrangements with the creditor to pay off the balance monthly.

Third, any credit card that is over 50% of the available credit line should be paid down to under half of your total credit line. Your credit score is lowered when your available balance is over 50% of your total credit line.

Finally, if you have bad or no credit and have no credit cards try to obtain two credit cards and make sure all of your monthly payments are made on time. This will help increase your credit score. If you cannot be approved for a unsecured credit card, obtain a secured credit card.

Bad debts can really hurt your score and your life. There is a solution however. When I started looking for ways to improve my score last year I performed a detail search on the best and fastest way to fix it. I found many scams out there. I also found some solutions that were not scams. Because I felt like others should know about this I created a website called http://www.your-credit-solution.com . It provides you with several options to repair your credit. I used the one that is ranked #1 for credit solutions ( http://www.your-credit-solution.com/creditsolutions.htm ) and was able to increase my score from 540 to 746 in less than 90 days. Check it out. I am sure you can find a solution that meets your needs.

Good Luck!

Since you are still young; I would take action quickly and get on with the rest of your life (with good credit).

Repairing your credit can be a very involved process. I would suggest hiring someone to do it for you (unless you have the know-how and time to do it yourself).

Lexington Law is very exceptional at repairing credit (and very inexpensive). Check them out here: http://www.keyblast.com/2.php

good luck!

you can get some good credit cards with low apr and some reward programs and then buy the necessary things with this card and pay the bills on time. You can also try some reward cards they are good. All these will make your credit good.
To know more you can visit
http://www.creditcardbiz.blogspot.com

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