I’m 22 and Need to Fix My Credit So I Can Buy a Car

“Dear Steve,

I am 22 years old. I have never had any help with my family with any money growing up.

I graduated High School in 2009 and started out with a couple credit cards. Bank of America for School books and Best Buy for a laptop. I also had a car payment that my sister had underneath her credit that I paid $360/$180 a month for plus rent.

These extra credit cards was not something I ended up being able to afford since I wasn’t making enough in tips. It has been 2 and 1/2 years since I have even tried to pay them and I no longer have my car.

I owe about $2500 on two credit cards. I haven’t paid them in 2+ years. I am in need of getting a car, and moving into a new place.

I am financially stable now where I can afford the car payment/rent/saving. What is the best way to get in contact with these companies to pay them off.

Have I completely shot my credit?

And Will I be able to get a decent car?”

Don’t despair. This is going to take a little bit of time to recover from but I can get you headed in the right direction.

credit goodThe first thing we are going to need is a consolidated credit report. This type of credit report will show all three credit bureaus on the same report. I find them easier for people to spot errors with some the data is merged. The other way to do this is to go to AnnualCreditReport.com and get a free copy of your individual credit reports from the three main credit bureaus. However, they will be in different formats and harder to crosscheck. They will also not contain your credit scores.

If you find any items on your credit report that are inaccurate or incorrect, you should dispute those items. You can follow this guide on how to do that.

It seems your old foray into the credit world ended badly with both cards going into default. So not only are we going to have to take care of those but we need to start getting new good credit being reported about you.

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At this point the best way is to use a couple of secured credit cards where you will put up a deposit that is equal to your credit limit. Look for secured cards that report to the major credit bureaus. You will want to make sure your limits are $750 or higher for them to add more weight on your reports.

Once you get the secured credit cards then use the information from your credit report to locate the old accounts. But the importance of getting the secured cards going as soon as possible is so they will appear on your report longer and that additional credit history length will help get you in shape to buy the new car.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

The uncertain part of this situation is who owns those old credit card accounts now. They have most likely been sold to a debt buyer and it is uncertain if they even have the proper documentation to collect on the debts.

So let’s get going on the secured card first and then let’s worry about the old debt. Once you get your secured cards come back and update me in the comments and we can discuss how to best tackle the debt.

Eventually we should be able to get your credit scores back up to the point where you would be able to walk into a new car dealer and take advantage of manufacturer subsidized financing to buy a new car.

A great free service to monitor your credit score for free is CreditKarma.com and I’d suggest you signup with them. They have a next phone app as well.

Make sure it is a car you love and will fit in your life for the next ten years. I want you to drive it long past the payments on it and enjoy having a reliable car that is payment free.

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

Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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