Top 6 Steps to Rebuilding Credit

I recently conducted a poll of bankruptcy attorneys across the country for their recommendation on how to rebuild credit after bankruptcy. It was not a scientific study, but the results are sound, beneficial, and simple to implement.  Anyone can do it.  https://bankruptcylawnetwork.com/wp-content/uploads/Toy-Toolbox-150x150.jpg 150w, https://bankruptcylawnetwork.com/wp-content/uploads/Toy-Toolbox.jpg 488w" sizes="(max-width: 300px) 100vw, 300px" />

What was the number 1 suggestion?  Pay your bills on time to get the biggest boost of your credit score and to avoid late payments that hurt your credit.  Now, how do you go about getting credit to start the rebuilding process?  Follow these simple steps.

2. Start with your credit report, you can get a free copy at www.AnnualCreditReport.com. Check for mistakes and follow the end of report instructions on how to correct errors.

Next, find a friendly local credit union near your house or convenient to your travel routine.  Credit unions offer a number of products that you can use to rebuild credit. Think of these items as part of your tool box that you will use as needed.

3. Open a secured credit card account. This will require a deposit, usually somewhere between $200 to $500. Put down as much as you can afford, the higher the credit limit, the better. Limit use of this card to purchases you can immediately pay, such as a weekly gas tank fill-up.  Then use the credit union free online bill paying service to pay any purchases you charge on the account. This avoids losing money to interest and late fees, and more importantly, avoids dropping your credit score.

4. Next, take out a small credit union promotional loan, typically in the amount of $300 to $1000. These are made available throughout the year with catchy marketing themes, such as, Spring Cleaning, Summer Vacation, Birthday, and Christmas. Any amount will do, just so long as you do not spend the money. Remember, your goal is to rebuild credit not to get yourself in debt.  Pay the loan back after about a month or so, the sooner you do, the less interest you will have to pay. Then do it again a few months later. And again, to build up a history of paying back your debts on time.
5. After a few loans, apply for a credit union Visa or Mastercard to replace your secured credit card. Put the security deposit refund in a credit union savings account and start to save for emergencies. Repay the new card each purchase or each month to maximize the on-time payment history and to avoid those nasty late fees and interest charges.  As time passes, ask to increase the limit on your new credit card. Your credit score will react positively as financial institutions trust you with additional credit.
6. When the time comes, apply for a credit union car loan. Credit unions offer favorable terms with discounts on interest rates when you set up a automatic monthly repayment through your checking or saving account.

Remember, the top way to rebuild your credit is to pay your bills on time. Eventually, your credit score and your payment history will allow you to qualify for that home mortgage or other investment opportunity you cherish.