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Credit Repair for Your Future – Building Credit in the Aftermath

Todays Date: November 16, 2018

If you have had serious credit issues but have managed to get through them by doing credit repair, then you need to start building positive credit. You can do this in a couple of ways. If your credit repair efforts were successful, then you should be much happier with the looks of your three credit reports now. You should not have as much ‘derogatory’ credit on your reports. Accounts should have been corrected or wiped away if you repaired your credit properly.

Now your goal needs to be building new credit. This will become very important if you ever want to purchase something ‘on credit’ again. This situation will not resolve itself. You must build credit so that you will have a credit profile that an underwriter will consider. If you don’t do anything for many years, then down the road there will be nothing on your credit report and you will still be considered “high risk” because the underwriters will have no way to judge you. Sometimes underwriters will look at your bank accounts and utility bills and your auto insurance bills to see if you make timely payments. That info can help them decide whether or not to extend credit to you, but you will still be considered high risk and therefore will not qualify for the better loans. High risk loans have high interest rates and high fees attached to them most of the time. You would do well to avoid those kinds of loans because you won’t be able to pay them down very quickly. You might even end up ‘up side down’ on your car loan if your interest rate is 25% for 6 years. Don’t ever put yourself in this situation. You are better off picking up an old beater and paying cash for it than you are getting into a high risk car loan.

There are two standard ways to build credit: 1) credit cards, and 2) small secured bank loans that report to the credit bureaus. Whatever you do, make sure the loan you get will report to the credit bureaus. If it doesn’t, you are wasting your time. There are a lot of ‘second chance’ credit cards available. Yes, you are going to have to pay for them in some manner. Just be sure you keep the balance paid off and use them sparingly. Never think of a credit card as free money. They certainly are not free money.

You might be able to get a small loan from your bank if you have a car title or something else of value to offer them. Be certain they report to the credit bureaus. This is really important.  This is a good way to approach your bank: Tell them you will keep the money that they loan you in an account at their bank and you will use that money to make the payments. Get a 12 month loan. If it is $500, they could even charge you 25% interest and it would not cost you that much per month, and you are buying back your credit! You will just have to ‘suck it up’ a bit. In the end though, when you have rebuilt your credit, you will be glad you did!

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