I found it interesting that our local radio station was talking about budgets and credit this week. In the morning show, one of the host said, “you know how I remember to pay my bills? I pay them when someone calls me.” Bad answer, dude… and this guy is 33 years old!
If you’re paying your bills when people are calling – your credit is trashed. Here are the 4 FIRST things you need to do:
- Get a copy of your credit report. If you want to buy a house – call us and we’ll pull it for you. If not, remember that stupid commercial about “F-R-E-E that spells free. Free Credit Report.com that’s free.” I’ve never used them – they are for sure selling you some kind of identity protection – don’t get the insurance just get your report (there are tons of other places). You need the report to show all 3 bureaus so you see all three scores.
- If all the credit cards and car payments on there are past due – start getting it current. Get a second job, only eat PBJ, quit clubbin’ it for a while, carpool – suck it up and get your bills paid on time.
- If you have collections (not judgements) that are over 3 years old (and inaccurate) dispute them. You will need to include a copy of your drivers license and your social security card with the dispute letter. Send the letter to all three bureaus. Ditto on lates that are over 36 months and inaccurate. If there’s stuff on your report that’s recent and inaccurate – dispute that in a seperate letter. Make certain you use the exact account numbers shown on your credit report.
- If you have collections that are less than 12 months old and less than $500 – contact the creditor and tell them you’ll pay it – IF and ONLY IF they will remove the collection from your account. Get a letter from them confirming they will remove the collection prior to paying it – exchange your payment for the letter.
- Go to Fingerhut and apply for credit. It might only be $150 bucks. Use exactly ONE HALF of the credit they extend to you and pay it back every month on time like clockwork. Ditto with Orchard Bank. If you can afford $300 – then go to your bank and get a secured credit card. You want to borrow exactly ONE HALF of the credit extended to you and pay it back on time.
- After you have 2 types of credit (that report to the credit bureau) and that you’ve paid on time for 3 months, apply for a gas credit card or a Best Buy or a Jewlery account. Then pay them on time like clock work. Jewlery accounts are generally installment loans, get ahead of the payments as soon as you can. You need at least 4 accounts reporting good things about you to really improve your score! You can also look at Secured Credit Cards
Getting your credit back is hard work – but if you buckle down – you CAN increase your score. There’s no quick answer.