Many people had to file bankruptcy, and if they managed to avoid bankruptcy, they often had to raid their retirement accounts just to pay bills.
Now, the economy is beginning the long road to recovery, and as individuals, many of us have to do the same thing. If you are recovering from bankruptcy or late payments and poor credit, consider the following steps to restore your credit rating:
Check to make sure your credit report is accurate
Your credit score may be lower than you would like thanks to late payments and bankruptcy. Still, make sure to check your credit report and make sure that all payment information, account information and lender information is correct.
Errors on your credit report can make your credit score even lower than it may currently be. If you find errors, make sure to repair bad credit information.
Take out a prepaid debit card
If your credit score is low, you may be unable to take out a traditional credit card. A nice alternative to that is a prepaid debit card.
You put a designated amount on the card (usually a few hundred dollars), and then use the card just like a credit card. You don’t need to worry about late fees or being unable to make payments because you have already paid the money upfront.
Make all of your payments on time
While you are rebuilding your credit, you must be the perfect borrower. All payments should be made on time, and no checks should bounce.
Put utilities in your name
Put all of your utilities in your name. As you continue to pay on time, you should see your credit score slowly increase.
Remain at the same location for a few years
Creditors are looking not only for payments made on time, but for stability. Try to stay at the same residence for a few years and keep the same job.
Apply for a credit card again
After you have a six to twelve month history of payments made on time, have remained stable in the same residence and job, and have fixed any errors on your credit report, consider applying for a credit card again.
Be careful not to apply for too many cards at once. To be safe, apply for one. If you are rejected, wait to apply for about six more months.
Too many credit applications can lower your credit score, erasing all of the hard work you have been doing to raise your score. While bankruptcy and late payments can feel devastating, you can recover. Follow these steps to slowly improve your credit score.
While you won’t be deemed credit worthy immediately, with hard work and perseverance, you can enjoy the same credit score (or even a better one) than you did before the economic downturn.
About the Author:
This post was written by Melissa Batai, the founder of MomsPlans.com.
