How Can I Re-Establish Credit With Bad Credit? No One Will Give Me a Credit Card.

by Lynnette Khalfani-Cox, The Money Coach on March 16, 2010

in Credit Cards, Credit Scores, Student Loans


Q: How Can I Re-Establish Credit With Bad Credit? No One Will Give Me a Credit Card.

A: To re-establish credit after you’ve had credit problems in the past, try these three strategies:


1. Open a Secured Card.
With a secured card, you put up a certain amount of cash into an account – perhaps $500 or so – and that becomes your credit limit on the secured card. Apply for a single secured card; you’ll get it just by forking over the cash as I described above. Then simply on-time payments for 6 to 12 months. This will definitely help you boost your credit scores because it will generate some positive payment history for you. It will also help to offset somewhat the past negative marks in your credit files. Before opening a secured credit card, just make sure the bank that issues the card does, in fact, report to the credit bureaus.

2. Clean up Negative Information and Mistakes in Your Credit Reports.
Get your TransUnion, Equifax and Experian credit reports. You can get one of each report free each year from www.AnnualCreditReport.com. Dispute any mistakes you find. Also, contact your previous creditors and offer then a small lump sum payment to settle your debts, in exchange for them removing the negative information on your credit reports. Only do this for recently delinquent accounts (i.e. those from the last two years). Also, only give up cash payments to those creditors who agree, in writing, to delete black marks from your credit. If they simply note the account as “Paid” but leave the old, negative information there, that won’t help your credit.

3. Pay Your Existing Debts on Time.
I know you said that no credit card companies will give you a regular card. But it’s likely that you have some existing credit accounts. Whether you have other credit cards, a mortgage, an auto loan, student loans, or other debts that are being reported to the credit bureaus, be sure to pay all those bills on time – every month without fail. The single biggest determinant of your credit score is your payment track record. That accounts for 35% of your credit score. So simply paying your bills in a timely fashion will improve your credit rating over time.


By using these three techniques, you will see your credit scores improve in a year or less.


Related Questions:

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  • no one will give me a credit card
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Lynnette Khalfani-Cox, The Money Coach

Personal Finance Expert and Co-Founder at Ask The Money Coach.com
Lynnette Khalfani-Cox, The Money Coach is a personal finance expert, speaker, and author of numerous books on personal finance. She appears frequently as an expert commentator on television, radio and in print.

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