Steps To Rebuilding Your Credit History by Todd Holliday

If you have bad credit there are steps that you can follow to rebuild your credit history. No matter how you got into your current situation there is a way out of it. Unfortunately, there are no quick fixes. It will time and effort to rebuild your credit, no matter what anyone tries to tell you or sell you. Fortunately, if you work diligently, you can rebuild even the worst credit history.

The first step to take if you have bad credit is to stop making the problem worse. If you have late bills or payments or you have credit cards that are over their limit you need to address these problems. You will need to get all of your payments current and get all of your balances under their limits. This involves developing a budget that you can live with and sticking to that budget. If you simply cannot get your payments current, or you have no idea how to set up a budget, you need to find professional help. Look for low cost or no cost assistance that may be available in your area. The goal here is to get your payments current so that you will not be making your credit history worse.

The next step is to check your credit report. You are entitled to one free credit report each year from each of the three major credit agencies, and you are also entitled to a free report if you have been turned down for credit. When ordering your report start at the annualcreditreport.com web site. This site links back to the web sites for the three nationwide consumer credit reporting companies. Ordering a credit report can be done entirely online. You will need to enter some personal financial information to get access to your report, so having that information on hand when you start will make things go more smoothly.

The two things that you are looking for on your credit report are incorrect information and evidence of identity theft. Challenge anything on the report that appears to be incorrect. You can make this challenge on line, and your challenge will usually be answered in a week or less. It is definitely worth the trouble to challenge any incorrect information you find because it will usually be corrected. While you cannot alter any information that is correct but negative, you can send a statement explaining your situation regarding any negative credit information. Make sure your statement is short, well written, and to the point.

After that, your next step is to apply for new credit. This may seem counterintuitive, but there is a reason for doing this. What you want to do is open up a new line of credit, and then not carry a balance on it. Why? Because having available, unused credit raises your credit score. If you get a new line of credit, and you use it for any purchases, make sure that you pay them off when you receive your next bill. You want to avoid carrying another balance, so do not buy anything that you can not pay off immediately. If you lack this kind of discipline, skip this step.

You can rebuild your credit history, but it will take time and effort. It will take time for your negative credit information to be replaced with good information, and it will take effort to make sure that you are creating good credit information. Create and stick to a budget so that you can make your payments on time. Check your credit report so that you can challenge any credit information that is incorrect. Use new credit wisely to build up your credit score. Follow these steps and you can rebuild your credit history.