What’s the best way to repair REALLY bad credit after you’ve paid OFF all your debt?
I took out a personal loan, and an emergency loan (in my name) to help pay for college, and then I found out my dad ( who promised to pay them all), didn’t pay any of them, not to mention, racked up my credit card. So over the last few months, I managed pay all of them off. However, now I don’t know what to do to repair my credit.
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Am I correct that you still have at least one valid credit card? If so, and your father knows the number, ask for a replacement card with a new number. Once you have a safe, valid credit card, charge something for which you already have the money. Then, when the credit card bill comes in, pay it before the due date. Continue doing this every month or so, but remember, only purchase what you already have money for. This is the only way to rebuild your credit. It’s long and somewhat tedious but it works. After a year, take out — if you can — a small loan. Pay it back faithfully and that will also help your credit. As you’ve found out, it’s very easy to ruin your credit rating, but you’re young so have a long future ahead of you to repair it. Just be patient.
Get a credit card (if you closed your old ones - if not, keep one open). You want people (i.e. Transunion, Experian, Equifax) to see that you have credit and use it wisely.
What is “using it wisely”? Well, having a credit limit and not using all of it is a good start. In other words, if you have a $500 limit, keep the amount on the card well below that as much as you can.
You want to prove that you can live within that boundary. That’s what your credit score is - an estimate of your responsibility with money.
You don’t have to pay the card off every month (though I do recommend it). You can call the bank and request that they raise your credit limit over time, but DO NOT use the entire limit - don’t even come close.
Oh, and never miss a payment.
I’m sure there are other tips too, but these are a good start.
In order to build up your score again, you would need to obtain a loan or credit card (secured if you cannot get one any other way) and make on time payments.
If you have a credit card just use it for everything. If you pay your bill when they come, you are good with debt, if not, you are bad with debt.
That’s the most simplistic way to put it.
And if you are good with debt, your score goes up and lenders would love to lend you money. That’s it.
if you don’t have a credit card and have a bad credit, get a secured card.
It’s like a normal credit card but you will have to put a cash deposit down (it’ll gather interests) and use it like any credit card. If you mess it up they have your deposit, if you pay your bills over time your score will get better and better. With a secured card nobody is turned down, hence the deposit.
This is a good one to have:
http://www.esuperfind.com/nextmillenniumcc.php?id=nsth
Usually, when you have paid all your debt, bad credit standing would be cleared. If you want more clarification on your situation, you can check out http://www.moneyhighstreet.com. They offer debt management programs for individuals who want to learn more about debt consolidation and management.