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.
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