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I have bad credit, how do I fix it?

I'm in my early 20's and I have bad credit. A few years ago, I went behind my parents back and got a load of credit cards and charged about $4000. I have been trying to pay back my creditors, but I have missed payments, not paid enough. It's just been bad. I'm a full time student and I work part time. I'm putting myself through school, so sometimes money is tight. I realize what I have done, and I have learned my lesson. I don't buy something unless I have the cash now. But, that still doesn't help my credit. In a few weeks, I will be acquiring a large amount of money. I plan on using it to pay off all of my credit cards, and then canceling them. However, how do I go about re-establishing my credit. I'll still have a car payment and student loans, just no more credit card debit. I'm young and I want to be able to have credit to buy my own home in a few years. Can I repair my credit in 5 years or so? If so, How?

Public Comments

  1. I WOULD NOT cancel the cards now. I would pay them down to zero and leave them open, and dont use them if you dnot want to. This should improve your credit. Possibly it will take a little while, but eventually it will be way back up there. Closing them all out is going to limit your credit history, which always makes your score lower then it may actually be.
  2. Frankly, you should not close your credit card accounts. This reflects negatively on your credit report for a few reasons. Creditors will look at how much credit you have as a sign of how trustworthy you are. If you have 3 credit cards with a limit of $500, they see that you have $1500 of credit. When you close your accounts, they see that you have $0 credit. To them, that means you either are not trusted to have credit, or you are not responsible enough to have credit by your own admission. The best thing you can do is to have credit that you don't really use. Let's say you have a credit card and you want it to help you get your credit back on track. All you need to do is have a bill that you can pay with cash go onto your credit card instead. Pay off the balance of the credit card every month with the cash you would have used to pay the bill. This way, your bills are getting paid, you're not buying things you can't afford, and you are building credit all at the same time. Good luck!
  3. I was in the same boat that you were in, but I'm in my early 30's now. The best thing from my experience is to pay them off, but keep them open, except the seriously delinquent ones. If those accounts are closed, pay them off, and leave them alone. Close one, maybe two but if you can, leave them open. Reason being that in order to get credit, YOU MUST HAVE credit. Bad credit is better than no credit. Hey, every body makes mistakes, that's why there's rubber at the end of pencils. After all is said and done, you should have a checking and savings account, a couple of credit cards, a couple of department store credit cards, your student loans and your car payment. Also, if you're going to come into a substantial amount of money, look into getting a stored-value Visa or Mastercard. I have one myself aside from my standard checking or savings and I use that instead of my credit cards. That way, the only time that you should use your credit cards is an absolute emergency. That system worked for me. My score went from a 565 up to a 683. Another thing is that you can report your payment history (i.e. rent, cable, electric, phone, etc.) I sent a link below that explains how you can take advantage. It's an additional way to show that you've learned from the err of your ways. It worked for me! Good luck!
  4. I just went through the same thing. You can repair it in less time than you think. Get a free credit report at: https://www.annualcreditreport.com/ Go over all 3 credit reports with a fine tooth comb, and if anything is not accurate, dispute. You can always call the companies and ask them to work with you so you don't miss anymore payments. You're credit score might not be as bad as you think! Remember, 1 week late is not the same as 30 days late. So if it's due the first, and you pay the 21, you're technically still on time. Don't cancel the cards!!! That's the worst thing you can do. Once they are paid off use them to make tiny purchases like mcdonalds then pay in full. It'll report that you're paying on time. Once the cards are in good standing, they will probably increase the limits on them which will bring down your utilization percentage, raising your score. check out creditboards.com. that site has been invaluable to me.Also consider a service like truecredit.com if you can swing it. it'll help you track your progress. Credit cards are a fact of life. You'll need to use them wisely in order to get the best rates on car and home loans. Good luck.
  5. If you cancel your card, you'll be hurting your credit ratio. You want to deliberately keep your oldest credit card open, even if you never use it. You want to always pay the minimums of each loan on time every month. You want to keep your available credit high, but actually only have balances equalinig 25% or less. You want to keep your credit inquiries to a minimum. Try for no more than 3 or 4 per year for any type of loans. You do these things and your credit score will quickly soar into the 700s. ------------------------------... http://www.bestcreditrates.net
  6. Congrats on taking responsibility for your financial problems - that's a great first step and it sounds like you're already developing good financial habits! Have you tried getting one of those free credit repair consultations: Check out: http://www.mortgageous.com/healthy-credit They have specialists and even attorneys who are trained to help you rebuild your credit quickly. I've heard of people seeing major improvement in their credit score after seeking help from credit counselors, and much faster than your five year time frame. Best of luck to you - I think you're on the right track. .
  7. PIGGYBACKING: Despite its' virtually unlimited potential, piggybacking is not used by nearly as many consumers as it should be. It's easy, effective, and extremely fast. Unfortunately, it's mostly used among parents and siblings while those who can really benefit stay in the dark. How it works. Almost every credit card or credit account will allow the primary account holder to add on (at a later date) what's known as an "Authorized User" or "Secondary Account Holder". In most cases, when this is done, the entire account history (retroactively) gets posted to the authorized users credit report regardless of their current age or credit history! For example. If it's a credit card with a $10,000 limit which has been paid as agreed for the last 10 years, then that complete history will be posted to the authorized users' credit report. I once saw a clients' credit report who used this technique with his mother. He was only 24 at the time and he had a $15,000 Gold credit card on his report with history going back 11 years! I laughed as I thought to myself that this kid would have had to be approved when he was 13 years old for this account to be his! As you can see, this strategy is usually only used by parents and their children and in most cases with no regard to the benefits the children are reaping credit wise! In fact, in recent years, due to its' effectiveness, this technique has led individuals with excellent credit scores to "rent out" authorized user accounts on one or even multiple credit cards in return for a fee! I once recall seeing an ad in USA TODAY for just such an opportunity. Like most good credit loopholes, I'm sure this methods' days are numbered much like what may be the case with... Terry Price is the founder of Consumer Education Group which publishes the Credit Secrets Bible (in print since 1994). For more information on the CREDIT SECRETS BIBLE you may visit: http://gaby1221.niesong.hop.clickbank.net
  8. Bad credit can frustrate your efforts at getting a credit. Hence ensure you keep your credit report clean. If there are any errors in the report, undertake credit repair to clear out any errors. This can be tiring and frustrating, but highly rewarding. Though law recognizes and protects your rights, it is your duty to remove any anomalies in
  9. Bad credit is one of the worst problems to have... however there exists a solution. I will hereby talk from my personal experience. I did debt consolidation a couple of years ago, however If I had to do it again I would pay to some minor details, if someone wants to get out of debt today it is pretty easy with a debt consolidation plan, however it may get a bit tricky at times, I suggest you get as much information as possible online on this first, a good place to start in my humble opinion is astraight to the point ebook with question and answer I found : http://umgarticles.atspace.com/debt-consolidation.htm if it helps kindly remember me in your voting!.. cheers!
  10. Yes, pay off those credit cards but keep them and rebuild your rating/relationship with them. If you want to learn more about credit repair then visit my about me section here on answers. Good luck,
  11. One site. I encourage you all to visit if you have bad credit, http://creditinfocenter.com/. It's the best FREE site for credit reapir on the planet, no lie. None of that "pay a counselor or lawyer" crap, just hard core, do-it-yourself techniques that WORK. Check out the forums, they have a TON of life-saving advice. Tell 'em yragcom1 sent ya.
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