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Under: Debt
Rebuilding Credit
  • Wenosaurus
    I was naive and opened a credit card in college just to receive the free air flight when you open a new account. 3 months later, I was $5,000 in debt and was afraid to seek help from my parents because they'd forbidden me from having any credit cards. I struggled to pay it back; therefore, it eventually went to a debt collector and effected my credit score. My parents started receiving those harassing calls and soon found out. My mom then paid the debt in full all at once; however, this one experience has been haunting me ever since. I graduated in 2010 and now have a full-time job with a great salary. I've been paying all my student loans and bills on time; however, I still get denied when I apply for credit cards.

    Is there anything I can do to rebuild my credit?
  • macinsurance
    The main factors contributing to you credit score are:

    Credit to Debt Ratio: What percentage of your credit are you using. (The lower the better)
    The # of Hard inquiries you've had: (each time you apply for auto loan, credit card, mortgage, rental application, it is considered a "hit" on your score. The more you have in a short period of time, the lower your score will fall)
    The # of Open installment Loans: (Auto loan, mortgage)
    Whether or not you've declared bankruptcy
    The number of delinquency accounts active: (30days, 60days, 120days past due)
    Do you have a mortgage? (Actually can help you)

    Rebuilding your credit can take a while, 6-18 months sometimes, but you really need to be patient. I was in the same boat as you, but my issue was with letting student loans default. I thought they were being deferred when in fact, they were just racking up days of delinquency.

    I would recommend going to experian.com or freecreditreport.com (both run by experian) and get a copy of all 3 scores (you're allowed 1 free report each year). Go over the information to make sure there are no mistakes on your report. Experian even has a calculator to show you how changes in credit % or # of inquiries can increase or decrease your score. I also pay $8.99 a month and can refresh my score as many times (soft inquiries) as I'd like without it affecting my score. It's very helpful!!!

    Hope this helps. But if you want to improve your score, reduce your debt, don't miss a payment, and make sure you settle any outstanding bills or fines before they go to collections.




  • AldenWicker
    Hi Wenosaurus,

    We have a great article on this subject from Credit Karma. Have you considered a secured credit card? http://www.learnvest.com/2011/04/rough-credit-history-get-a-secured-credit-card/

    Hope that helps!
    Alden
    Assistant Editor and Social Media Coordinator
  • cobletn
    I would reccomend getting a secured credit card. These are usually for people with bad/poor/ limited credit. I know that there are some major banks that offer secured credit cards. US bank, Capital One, applied bank.
    I Know all of this only because I too was once in financial trouble and I'm trying to re-establish my credit.
    You could try bankrate.com, or creditcards.com to find secured credit cards.
    What ever you do always look for a credit card that will report all activity to the three major credit B.
    Hopefullly , this will help you....

    TC

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