How to Get Out of Debt With the Get Out of Debt Guy » improve credit

My Credit is Ruined and I Just Got Laid Off. How Can I Improve My Credit Once I Get a Job? – Tina

Consumer — Sun, 29 Apr 2012 21:24:06 +0000

I recently got laid off and I have a lot of credit cards and other bills that I can’t pay. I have no savings and I recently checked my credit score and it’s already being ruined. I’m afraid if I don’t get a job soon I’m never going to get out of debt or save my credit. I need help!

My debt is ruining my credit and I’m worried I’ll never get it in the 700 range and become debt free. Is there any ways or methods I can accomplish this once I get a job? If so how?

This is your chance to be a hero and help out this person by providing your feedback and answer to the question in the comments section below.

We Want to Buy a House But Need to Deal With Our Bad Credit. – Alejandra

Steve Rhode — Thu, 17 Feb 2011 16:10:37 +0000

From How to Get Out of Debt

“Dear Steve,

Im 27 years old, hoping to purchase a home $150,000-$185,000 hopefully in june of 2012. Last years gross combined income was about $85,000. my husband is year 6 post bankruptcy, his score is about 650-680, most of my debt is old, i have a credit score of 584 and 602. I am currently in good standing with auto loans and student loans but I have about 8 old, bad accts: 1 was part of my husband’s bankruptcy that is scheduled to come off in 2012, a couple of collections agencies that are also scheduled to run off in late 2011 and 2012. I have settled with one company and we have decided to paying off or settle with others that are scheduled to run off in 2012.

My question is, what is the best senerio in order for us to acheieve our goal next year? Should I also settle or pay off debt that will run off this year or will i be wasting my money because they are about to fall off my credit report anyway, and how will my credit report and score look after everything is said and done?

Alejandra”

The Answer:

Dear Alejandra,

The good news is it is possible to turn this around. The bad news is that right now your credit scores are not great.

Your scores are in the D range. His scores are in the C range. For the best rates we need to get you up into the 750+ range.

So here is what you should do.

Each of you should pull a current consolidated credit report. A single bureau report does not show you all the information. not all creditors report to all credit bureaus.
On his report, any account that was included in his bankruptcy should reflect that it was discharged in the bankruptcy. Those accounts should fall off 7 years from the date first reported delinquent. If it was a Chapter 7 bankruptcy it will be reported for 10 years. The bankruptcy is not a big deal and not what is holding you back.
On your consolidated credit report I need for you to identify all the open and old collection accounts.
Pay those off as soon as possible. Don’t settle them because the debt forgiven will show as a bad debt. Be sure to keep proof of payment in case one of those collection companies fails to update your credit report. make sure all your old accounts have either fallen off or you have paid them before you apply for a mortgage.

After you do all that, or at the same time, you need to focus on getting new credit and using it responsibly. The debt you have is not going to boost your score. A student loan and a car payment do not show responsible unsecured credit use which actually counts more in a credit score.

I’ve already written a guide on what ti do, just read and both of you follow this guide.

On top of doing all of that, keep in mind that while nearly 100% financing programs still exist for those with good credit, the more money you can put down will help your approval chances.

Between now and the time you find your home next year, open a savings account and save, save, save.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

@GetOutOfDebtGuy

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

Do It Yourself Guide to Credit Reports: 10 Ways to Improve Your Credit

Amanda Miller — Wed, 02 Jun 2010 21:39:00 +0000

From How to Get Out of Debt

So your credit’s not so hot. A few late payments, maybe an account or two that went to collections. What’s the big deal?

As you’ve probably found out, it may be a very big deal. You’ve probably already been turned down for the best credit cards and maybe you’ve had trouble getting a car loan.

Perhaps you’ve even put off buying a house because you’re sure you can’t qualify. And though you may not realize it, you might even be paying more for car insurance because of your damaged credit report.

Is there anything you can do to clean up your credit rating? Absolutely! But it shouldn’t cost you a lot of money. And you shouldn’t expect overnight miracles. In this publication, we’ll sort out fact from fiction and suggest legitimate steps you can take to start improving your credit today.

Step #1 : Review Your Credit Report

First things first: Get your credit report. You have to know what’s there before you can make it better. There are three major credit reporting agencies:

You can order your report from any one of the three. There is usually a fee, unless you live in Colorado, Georgia, Massachusetts, Maryland, New Jersey or Vermont, where you can get a copy for free. You can also get a free copy if you have been turned down for credit in the past 60 days, are on public assistance, are unemployed and looking for work or have been a victim of credit fraud. But whether or not you have to pay for it, make sure you get it.

I recommend you get a consolidated credit report, which contains information from all three credit-reporting agencies. A consolidated credit report is easier to understand, will arrive faster and will cost approximately the same as ordering separate reports from each of the big three agencies. You can order your consolidate credit report at GetOutOfDebt.org.

Once you have your credit report, then what? With some work and some patience, you will be able to get your credit report in better shape. Here’s how:

Step #2 : Make Sure It’s Accurate

You’ll want to make sure your credit report is as accurate and complete as possible. For example, if you have paid off an account but it is still listed, make sure the report lists a zero balance. In particular, look for:

Incorrect or incomplete name, address or phone number
Incorrect Social Security number or birthdate
Incorrect, missing or outdated employment information
Incorrect marital status — a former spouse listed as your current spouse
Bankruptcies older than 10 years or not identified by the specific chapter of the bankruptcy code
Lawsuits or judgments older than seven years
Paid tax liens older than seven years, delinquent accounts older than seven years or that omit the date of the delinquency
Credit application inquiries older than two years
Unauthorized credit (not promotional) inquiries — credit-reporting agencies usually do not remove these at a consumer’s request, but it never hurts to ask
Commingled accounts — credit histories for someone with the same name or similar Social Security number
Duplicate accounts
Premarital debts of your current spouse attributed to you
Lawsuits you were not involved in
Incorrect account histories — such as a late payment notation when you paid on time or a debt shown as past due when it was discharged in bankruptcy
Paid tax, judgment, mechanic’s or other liens listed as unpaid
A missing notation when you disputed a charge on a credit card bill
Closed accounts incorrectly listed as open
Accounts you closed that don’t indicate, “closed by consumer”
Incorrect aliases

A few caveats:

Accounts that have been paid off can still be listed on your report, although they should indicate that you’ve paid them off.
If you’ve been through bankruptcy, both the public record information about the fact that you’ve been through bankruptcy can be listed and the individual accounts that were discharged may also have a notation that they were included in your bankruptcy.
Information about accounts you share, or used to share, with a spouse will be listed in both your reports.
Many people incorrectly assume that if they have paid off a past-due debt, the old negative information will be removed. It will remain on the credit report for up to seven years, six months.

Once you’ve compiled your list, complete the request for reinvestigation form that came with your credit report or type a letter describing every problem. Send your letter to the address provided by the credit-reporting agency for disputing information. Enclose copies of any documents you have that support your claim. Once the credit reporting agency receives your letter, it must:

Complete its investigation within 30 days of receiving your letter
Contact the creditor reporting the information you dispute within five days
Review and consider all relevant information submitted by you
Remove all inaccurate and unverified information
Adopt procedures to keep the information from reappearing
Reinsert the information only if the creditor certifies that it is accurate and notifies you within five days of the reinsertion, and
Provide you with the results of its reinvestigation, including a new credit report, within five days of completion

If the credit-reporting agency claims that the creditor reporting the information verified its accuracy, contact the creditor. Explain that it is incorrect and demand that it be removed. Creditors who report information to credit reporting agencies must:

Not report information they know is incorrect
Not ignore information they know contradicts what they have on file
Notify credit-reporting agencies when you dispute information
Note when accounts are “closed by the consumer”
Provide credit reporting agencies with the month and year of the delinquency of all accounts placed for collection, charged off or similarly treated, and
Finish their investigation of your dispute within 30 days

If the creditor will not remove the incorrect information, contact the credit-reporting agency directly for help.

If you get nowhere, you have the right to put a 100-word statement in your file explaining your dispute. Don’t always assume that adding a 100-word statement is the best approach. In fact, it’s often wiser to simply explain the negative mark to future creditors than to try and explain it in 100 words or fewer. Adding a 100-word statement may be the wrong thing to do if you are not going to be diligent about removing the comment. If you don’t, it will stay on your credit report, alerting creditors to your problems, long after the negative information falls off your credit report.

After you have completed Step #2, you’re ready to start working on the rest of your report. Here are the main items you’ll need to focus on:

Step #3 : Build Credit References

Ideally, you want to have at least a couple of major credit cards (Visa, MasterCard, American Express or Discover) as references on your report. These will be the strongest references on your report if they’re paid on time.

Often, credit reports don’t include accounts that you might expect to find. Some major commercial lenders don’t report mortgages or car loans, for example. Local banks or credit unions may not provide information to credit reporting agencies. Before you apply for a new account, ask if your on-time payments will be reported monthly to a credit reporting agency.

If you don’t qualify for a regular credit card, consider one of the following:

Cosigned or guaranteed account: Someone else promises to repay if you default. Pay the bill on time each month or you’ll hurt your cosigner’s credit too!
Add onto someone else’s account: A relative or friend can add you on to their account as a cosigner or joint account holder and you’ll benefit from their on-time payment history. But if they are late with payments, that will show up on your credit too! Having someone add you on to his or her account as an authorized user does not help your credit that much.
Secured credit card: You deposit a sum of money with a bank and are given a credit card with a credit limit for a percentage of the amount you deposit. These cards can be very helpful for rebuilding credit quickly.

Step #4 : Add Information Showing Stability to Your Credit File

Creditors like to see evidence of stability in your file. If any of the items listed below are missing, send a letter to the credit reporting agencies asking that the information be added. Enclose any documentation that verifies information you’re providing, such as your driver’s license, a canceled check, a bill addressed to you, a pay stub showing your employer’s name and address or anything else similar.

Current employment — employer’s name and address and your job title
Previous employment if you’ve had your current job less than two years
Current residence, and if you own it
Previous residence if you’ve been at your current place under two years
Date of birth
Social Security number

Again, credit-reporting agencies aren’t required to add this information, but they often do.

Step #5 : Build a Great Payment History

It goes without saying that paying your bills on time is the key to a great credit rating, but if your payment history were perfect, you wouldn’t be reading this. Before I talk about what to do about it, I need to explain how long negative information can stay on your report.

Generally, the rule is that negative information – such as late payments, collection accounts or judgments – can be reported for no more than seven years and six months from the date the original payment should have been made.

Strategy:

While there’s not much you can do to remove accurate late payments, you can start mailing every single payment on time from here on out. Eventually lenders will consider the most recent payment information more important than the older information.

Step #6 : Take Care of Collection Accounts

Accounts that have been sent to collections are a problem in two ways. First, the original account (the credit card, for example) may be listed as a “charge off” or “profit and loss” account. (Both simply mean that the lender wrote off the account as a bad debt — and probably sent it to collections.) Secondly, the account may be sold to more than one collection agency if the first one can’t collect.

Collection or profit-and-loss accounts, that were placed on your credit report before January 1, 1998 (when a new credit reporting law went into effect) may be reported for seven years from the date they were placed for collection, regardless of whether they were placed for collection internally or with an outside collection agency.

In the case of profit and loss accounts, the seven-year period begins with the date that the account was written off. Unfortunately, it’s not always clear exactly when an account was written off or sent to collections. Also, in some cases, lenders wait months or years before writing off accounts or sending them to collections — and that can drag out the reporting period for a long, long time.

The updated law is much clearer. Under the new law, the seven-year reporting period for collection or profit and loss accounts begins 180 days after the payment should have been made, regardless of how long it takes the lender to write it off or turn it over to collections. The new reporting period applies only to information added to a credit report on or after January 1, 1998.

If an account is sent to a different collection agency because the first one couldn’t collect, that is not supposed to start a new seven-year reporting period. All three major credit reporting agencies try only to report collection accounts for seven years from the date they were placed for collection.

Strategy:

Make sure collection accounts are paid, and listed as paid on your report. You may be able to negotiate a reduced settlement with the collection agency to get a debt paid, but there may be consequences.

Step #7 : Open Deposit Accounts

Creditors look for bank accounts as a sign of stability. They also look for bank accounts as a source of how you will pay your bills. If you fill out a credit application and cannot provide a bank account number, you won’t be given credit.

A savings account, too, will improve your standing with creditors. Even if you never deposit additional money into the account, creditors assume that people who have savings accounts use them. Having an account reassures creditors of two things: you are making an effort to build up savings, and if you don’t pay your bill and the creditor sues you, it has a source to collect from.

Step #8 : Avoid Unnecessary Inquiries

Every time you apply for credit, or your credit report is accessed for another reason, that fact will be listed on your credit report as an inquiry. If you’ve been trying to get credit, your report may show many recent inquiries — and that can hurt your chances of qualifying.

Inquiries for pre-approved credit card offers you didn’t accept, as well as inquiries created when you review your own credit report, will not count against you.

Strategy:

Legitimate inquiries can’t be removed, so only apply for one loan or credit card at a time. Try to avoid more than four or five inquiries in a six-month period.

If you find inquiries on your report from companies you don’t know, dispute them with the credit reporting agency. They may be able to erase those inquiries if they prove to be truly unauthorized.

If you apply for a car loan at a dealer or home loan through a mortgage broker, you may see a sudden flurry of inquiries as they present your application to many lenders. Don’t worry. They will not count against you. When it comes to those kinds of credit inquiries, made within 30 days of each other, they count as only one inquiry. This is so that you are not penalized for shopping around for the best deal.

Step #9 : Recover From Bankruptcy

Bankruptcies can generally be reported for 10 years from the date you filed. The credit reporting agencies will remove Chapter 13 bankruptcies (where you pay back some or all of your debts over several years) seven years from the date of filing, even though they are not required to do so. In addition, the individual accounts that were included in your bankruptcy can be noted as such.

Strategy:

You can’t remove a bankruptcy early, but you can take other steps to improve your credit in the meantime. Use the strategies outlined in this article to build your credit rating. With work and patience, you will likely be able to get car loans, credit cards and even a mortgage — even with bankruptcy on your file.

Step #10 : Create a Spending Plan

Take a month or two to make lists of every outlay of cash or cash equivalent, such as check or debit card, used to make purchases or pay bills. Also, track your income for those months. At the end, list every category of expense and then write down the total amount per month (taking an average if you tracked expenses for two months) you spent in that category.

You are now ready to make a spending plan. One goal is to generate enough cash each month to put toward savings — a necessary step in rebuilding your credit. Your list indicates how much you project spending each month.

If the total exceeds your income or leaves you with little left over, you’ll have to cut back. For example, if you love to read and spend a lot on books, you can reduce that amount by checking books out from the library or buying only at used bookstores. If you go out to lunch every day, consider bringing your lunch from home.

But They Told Me They Can Remove Negative Information!

If you haven’t been tempted to find a faster way out of your credit problems, you wouldn’t be human. But there is no easy way out, no matter what some companies say. Have any of these ads caught your attention?

We can help you remove negative information — even bankruptcy!

There simply is no legal “loophole” that will allow you to remove accurate, but negative, information. So how do companies make these claims?

Usually, what they’ll do is flood the credit reporting agencies with disputes of correct, but negative information. They are counting on the fact that some information won’t be verified and will have to be dropped from your file. But you shouldn’t count on it. Most information is verified quickly. Even if it were removed from the file at one of the three credit reporting agencies, you’d have to luck out at the others, too.

Is it really worth paying hundreds of dollars for a tactic that isn’t likely to work? Besides, just because it may be been removed today, does not mean won’t reappear tomorrow.

At any rate, a new credit repair organizations law makes it more difficult for these companies to operate.

“We can get you a new credit file!”

Tempting, isn’t it? Forget it! What these companies will tell you to do is to apply for an Employer Identification Number (EIN), which looks similar to a Social Security number. You’ll also be advised to get another address. Then, the company will tell you to apply for credit using your new address and EIN so you’ll have new credit references and a “new” credit identity. This is called the “file segregation” scam and it’s illegal.

It’s a crime for you to make false statements on a loan or credit application or to misrepresent your Social Security number. Obtaining an EIN under false pretenses is also illegal. And, according to the Federal Trade Commission, you could be charged with mail or wire fraud if you use the mail or phone to apply for credit using false information. File segregation may constitute civil fraud under your state’s law.

Another trick is to give you a Social Security number from someone who has died in a far off place like Guam or Puerto Rico. That’s illegal too, and can really ruin your life if you get caught!

Credit Repair Organizations Act

Because credit repair scams are so popular and rip off so many people, Congress passed a law to help protect consumers when dealing with for-profit credit repair companies. These are the main protections offered by the credit repair law that went into effect April 1, 1997:

It is illegal for a credit repair company to make any statement that is untrue or misleading, or advise anyone to make a statement that is untrue or misleading, to a credit reporting agency or a credit grantor. (They can’t tell you to lie about accurate, but negative information!)
It is also illegal to advise people to alter their identification or alter the identification of their credit report in order to remove or hide negative, accurate information in their credit report.
Credit repair organizations cannot accept payment for services until they have been performed.
Before you sign a contract with credit repair organizations, they must give you a statement that explains your credit reporting rights under state and federal laws. The company must get your signature on that document and keep it on file for two years.
You must be given a dated, written contract to sign, which explains the services that will be performed, any guarantees about services, how much it will cost you and the date by which the services will be performed.
You have the right to cancel the contract, without penalty, within three business days of when you sign it. The contract must explain how to do this.

Keep in mind that additional state laws may also require credit repair firms to be licensed or bonded. If you are still considering doing business with one, check with your state attorney general or consumer affairs office for more information.

Have You Lost Money in a Credit Repair Scam?

Tell someone! It’s the only way to stop these companies from ripping off many more people. You may also be able to sue in court and get some of your money back.

To report a credit repair company, contact your state attorney general’s office and/or your state consumer protection office (look in the government pages of your phone book).

You can also contact the Federal Trade Commission, Consumer Response Center, Washington DC 20580; www.ftc.gov, 1-877-FTC-HELP.

Legally Remove Negative Information on Your Credit Report

Steve Rhode — Mon, 15 Mar 2010 14:31:01 +0000

From How to Get Out of Debt

Well it has happened again. Yet another credit repair organization has fallen under the sledgehammer known as the Federal Trade Commission and you know what, rightfully so, idiot scammers.

Wishful consumers desperate for a quick fix to hide accurate but negative items on their credit report are easy prey for credit repair scammers looking to make a quick illegal buck.

I am no longer surprised by the number of people who continue to sell credit repair services to consumers and think it is okay or they can get away with it. New people spring up every day even years after the Credit Repair Organizations Act passed. Here is but the latest.

From the Federal Trade Commission:

A credit repair company that falsely claimed it would help boost consumers’ credit ratings will settle Federal Trade Commission charges filed last year as part of “Operation Clean Sweep,” a federal-state crackdown on credit repair scams.

The FTC charged the Chicago-based defendants with falsely promising to remove negative information from consumers’ credit reports, even if it was accurate and current, in violation of the FTC Act and the Credit Repair Organizations Act. They also allegedly violated federal law by requiring payment before any service was provided to consumers. According to the FTC’s complaint, the defendants’ advertising stated, “We would never charge a large fee up front, or make you wait a long period of time to refund your money if we do not get results. You WILL see results in 60 days, or your money will be refunded in full . . . .” They charged $495 per person and $665 for a couple and required $219 or $269, respectively, in advance.

The settlement order bars the defendants from further violations and from misrepresenting:

They can improve consumers’ credit reports by permanently removing negative information, even when it’s accurate and current;
They can otherwise improve a consumer’s credit report or ability to obtain credit;
The full cost of their services and any restrictions on consumers’ use of those services;
Their refund or cancellation policy; or
The benefits of using their goods or services.

The order imposes a $226,793.90 judgment that will be suspended once they pay $20,000. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition. The order prohibits the defendants from collecting any payments from consumers who purchased their services before October 23, 2008, when the court halted their business practices and froze their assets. The order further bars them from
disclosing or benefitting from customer information, and failing to properly dispose of customer
information.

The defendants are Advantage Credit Repair LLC and Mark D. Solomon. The Commission vote to authorize staff to file the stipulated final order was 4-0. The proposed order was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division.

The Commission appreciates the assistance of the Better Business Bureau of Chicago & Northern Illinois in this case.

You can read the complaint and judgment here.

@GetOutOfDebtGuy

My Husband Was in Jail and I Was Left Raising Our Child With a Low Credit Score. – Julie

Steve Rhode — Mon, 11 Jan 2010 21:29:06 +0000

From How to Get Out of Debt

Julie

“Dear Steve,

I am a single mother of a five year old. I recently got a copy of my credit report and was not shocked to find out it was a very low 489. I had several medical problems, which turned into collections and one judgement, as well as some late payments on accounts from 2006-2007.

My daughter’s father was incarcerated for two years, so I was literally struggling to catch up and pay my bills. I have a better job now, and pay all my credit cards and car loans on time for the most part.

How long will it take me to raise my credit score to a decent number (at least in the 600′s)? I am working on paying off the old accounts and really would like to see my score increase. Please, any advice would be greatly appreciated.

Julie”

The Answer:

Dear Julie,

Increasing your credit score is a two step process. The first step is to close the door and resolve the old problems. That you are doing.

The next step is to begin using credit again and paying it on time so new good credit is reported on your credit report. Unless you do the second step, your credit report will end with just a string of failing marks.

Think about it like this. Your credit report is not a grade on how well you manage your money, but on how well you take tests. Remember back to your school days. If you passed every test but they were not recorded but every recorded test you failed, the lasting impression would be that you failed across the board. That would be factually incorrect but nobody would know that.

I would estimate that if your pay off the old accounts and follow my advice that within a year you will see a substantial increase in your credit score. If you want to make sure your credit score rises to the highest it can I would suggest that you order a consolidated credit report with the credit scoring option. It will show you exactly what additional steps you might need to take to improve your credit score ASAP.

It sounds like those years you lived through were a struggle, but you made it through. Congratulations.

Big Hug!

@GetOutOfDebtGuy

Chris Has Bad Credit. I Show Him How to Easily Get Good Credit.

Steve Rhode — Mon, 30 Nov 2009 15:29:53 +0000

From How to Get Out of Debt

“Dear Steve,

I’m 35, new dad, have a terrible credit score(in the 400s), want to improve my score for a better quality of life, and most of my debts are 8 years and older.

I want to find specific information on how to remove old debts from my credit report. (ex. To whom do I write my letters? What should my letters say? What exactly should I do, step by step?)

Most of my debts are over 7 years old and include cell phone bills, appliance store credit, medical bills etc. . Thank you in advance for your help. I look forward to improving my life, with your help.

Chris”

The Answer:

Dear Chris,

Thanks for writing me for help. And if you follow what I’m about to tell you this nightmare will be over soon and you can put this period of financial mess behind you. In fact after my own bankruptcy this is the process I used and it worked perfectly to rebuild my credit quickly.

Step 1 – Get a Copy of Your Consolidated Credit Report

Get a copy of your consolidated credit report. It is the type of report that includes all the major three credit reports in one report. I only use a consolidated credit report to check my credit and the link will take you to the credit report I use.

Your credit report is like a report card of sorts. You need to look it over and make sure that all the accounts listed on your credit report are yours. If they were not, you need to write to the credit bureaus that are reporting them and tell them they are not your and ask to have them removed. It’s like you looked at your school report card and it listed classes you did not take. They should not be there.

If the rest of the accounts belonged to you but you had a bad track record with them, that information stays on the report just as if you got a D in a class you took. Just because you got a bad grade does not mean the class is removed from a report card.

After seven years the bad credit items will no longer be reported on your credit report. When you look at your consolidated credit report if any of them list negative information longer than the seven year period, then when you write to the credit bureaus to point out any incorrect information, you can tell them about the old items.

Generally the credit bureaus are good about automatically removing the old items.

While you are at it, look for any delinquent accounts that may be younger than seven years old. If you have any, pay them off. The contact information for the creditor will be on your credit report.

Step 2 – Boosting Your Credit Score With Good Credit Using a Secured Card

Using the report card analogy, if you wanted to bring up your GPA you would need to earn some better grades to do it. It is the same with your credit report. If you want to bring your score up you need to start having new and good credit reported about you.

The best way to do this is to get and use a secured credit card. In fact get two different ones. I put together a section of the site that lists reviews for secured cards. Look at the secured cards here.

The advantage of getting a secured card is that you will get the credit card and not get a rejection on your credit report that will further hurt your credit. A rejection can be easily spotted by looking at the inquiry section of your credit report and seeing there is not a corresponding card opened. And with your current bad credit, if you applied for an unsecured card, you would get rejected.

The reason you will get the secured credit card on the first attempt is because you need to put up a deposit with the bank that is equal to your credit limit. The deposit will earn you interest and in the unfortunate event you were unable to pay your card and defaulted, the bank would use your deposit to pay the debt.

When looking for a secured card you want one that will report to all three credit bureaus. This is key. We need your new good payment history reported.

Now when I say use the card, you do not need to carry a balance from month to month. Just use the card for regular purchases and pay the card off either immediately or at the end of the month.

Also, if you get a secured card with a $300 limit, never have more than 35% of the limit on the card. Even though your initial limits may be low, you don’t want to max them out. You can always increase your limits by increasing your deposits. You can increase your credit limit by increasing your deposit with the card company.

I suggest getting more than one card so you can get as much good juice flowing to your credit report without having too many credit cards open. You could actually go with three if you wanted to, but no more than that.

Step 3 – Enjoy Your New Legally Rebuilt Credit

If you follow these steps now in a year you’ll feel better about yourself and you’ll have substantially better credit. If you don’t want to follow these simple steps, Chris, do it for your child.

To keep your score growing just make all your future payments on time and avoid defaulting again.

Many people who have lived through a period of bad credit are often credit shy, me included. For them, credit equals pain. So what they do is avoid getting any new credit. But this only prevents them from bringing up their grade point average.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big Hug!

@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

How to Get Out of Debt With the Get Out of Debt Guy » improve credit

My Credit is Ruined and I Just Got Laid Off. How Can I Improve My Credit Once I Get a Job? – Tina

Other Related Articles to Read

We Want to Buy a House But Need to Deal With Our Bad Credit. – Alejandra

The Answer:

Other Related Articles to Read

Do It Yourself Guide to Credit Reports: 10 Ways to Improve Your Credit

Step #1 : Review Your Credit Report

Step #2 : Make Sure It’s Accurate

Step #3 : Build Credit References

Step #4 : Add Information Showing Stability to Your Credit File

Step #5 : Build a Great Payment History

Step #6 : Take Care of Collection Accounts

Step #7 : Open Deposit Accounts

Step #8 : Avoid Unnecessary Inquiries

Step #9 : Recover From Bankruptcy

Step #10 : Create a Spending Plan

But They Told Me They Can Remove Negative Information!

“We can get you a new credit file!”

Credit Repair Organizations Act

Have You Lost Money in a Credit Repair Scam?

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Legally Remove Negative Information on Your Credit Report

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My Husband Was in Jail and I Was Left Raising Our Child With a Low Credit Score. – Julie

The Answer:

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Chris Has Bad Credit. I Show Him How to Easily Get Good Credit.

The Answer:

Step 1 – Get a Copy of Your Consolidated Credit Report

Step 2 – Boosting Your Credit Score With Good Credit Using a Secured Card

Step 3 – Enjoy Your New Legally Rebuilt Credit

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