How to Re-Establish Your Credit

by Lee Wyatt
(last updated August 23, 2013)

If you have ever had some financial difficulties, then chances are you need to learn how to re-establish your credit. It has gotten so easy in the past few years to have your credit ruined, even if you are trying to do the right thing. For example, a common reason to find yourself in need of rebuilding your credit is that you got into some financial trouble at a younger age, and then decided to stop that from happening again by only paying cash for everything. While this is indeed a responsible way to handle your finances, it does very little to build your credit. Luckily, re-establishing your credit is a fairly easy thing to do, though it can take a bit of time.

Work out a deal. Perhaps the single most stressful situation when trying to re-establish your credit is to contact your past creditors. However, this can be a hugely beneficial step if handled properly. Ideally, you can call these individuals up and try to work out a deal where you can either pay back a portion of what you owe, or establish a new repayment process. Either way, when you have successfully negotiated what steps you will take, and once you have completed those steps satisfactorily, those creditors will then remove the derogatory information from your credit report.

Dispute old, or inaccurate information. Take a good hard look at your credit report, and see if there is anything on it that shouldn't be. Everyone has one or two items that shouldn't be on there for whatever reason. Dispute those things that shouldn't be on the report, and if you are able to prove that you have handled them in the past, or that they are there in error, they will be removed from the credit report. This by itself can have a dramatic impact on your credit rating.

Get some new credit. Surprisingly when you are trying to get a house or some other type of credit, they like to see between four and six active (in good standing) credit accounts. These accounts can be a line of credit from your local bank (size really doesn't matter) or it can be a credit card. It really doesn't matter what, as long as the agency in charge of the credit reports to the credit bureau.

Pay bills on time. A surprisingly effective, and simple, method for re-establishing your credit is to pay your bills on time. This means that by simply paying your insurance, car payment, water bill, and electric bills can all have a positive impact on your credit rating. When this is done in conjunction with some of the other methods you will be amazed at how quickly your credit rating improves.

Author Bio

Lee Wyatt

Contributor of numerous Tips.Net articles, Lee Wyatt is quickly becoming a regular "Jack of all trades." He is currently an independent contractor specializing in writing and editing. Contact him today for all of your writing and editing needs! Click here to contact. ...

MORE FROM LEE

Creating a Life Sized Game Board

If you have ever seen the old Disney movie Alice in Wonderland, then chances are really good that you have seen a picture ...

Discover More

Mixing Paint

Have you ever noticed how expensive a painting project can be? There are several different methods you can use to save ...

Discover More

Cooking for Those with Nut Allergies

Cooking for those with nut allergies can be a bit of a challenge if you haven't gotten the practice. That being said, it ...

Discover More
More Money Tips

Building Good Credit

As you enter the world of adulthood you can start with a clean financial slate and start building your credit score. ...

Discover More

Dealing With Credit Reporting Agencies

Credit reporting agencies may just seem like another middle man, another device placed to confuse us and meddle with our ...

Discover More

Making Changes to Your Credit Report

Sometimes things can get on your credit report that you don't want and that aren't true. Fortunately there is a way to ...

Discover More
Comments

If you would like to add an image to your comment (not an avatar, but an image to help in making the point of your comment), include the characters [{fig}] in your comment text. You’ll be prompted to upload your image when you submit the comment. Maximum image size is 6Mpixels. Images larger than 600px wide or 1000px tall will be reduced. Up to three images may be included in a comment. All images are subject to review. Commenting privileges may be curtailed if inappropriate images are posted.

What is four minus 0?

There are currently no comments for this tip. (Be the first to leave your comment—just use the simple form above!)