Rebuild Your Credit Score - Without Incurring Debt!
This may be how you describe your self:
"I'm a good person. I pay my bills. I really work at it, but in the past things have happened and I used credit cards to pay for things. I had planned to pay the credit card bill, but then my car broke. So, I had to get my car fixed. Then, I couldn't pay the credit card, and it was late. Then they started adding penalties. By the time that they added penalties and interest, I owe more than my card limit. NO MORE CREDIT CARDS FOR ME!!"
BAD NEWS! -- Your credit score is based on your "commercial credit!" This is the credit cards and loans that report to the credit bureau. Without some sort of loan, your credit score won't increase.
GOOD NEWS! Rebuilding credit score can be done in 24 to 36 months. By using a secured loan, you can build credit score without incurring DEBT. Risk Free! No possibility of problems!
To rebuild credit score, the goal is to
- START NOW
- ADD POSITIVE history, and
- STOP ADDING NEGATIVE history.
Even after the most serious of derogatory credit issues, you can rebuild your credit to acceptable and even “good” within 36 months!
The "past-is-the-past", and often there are snarled knots of problems that show up in individual’s credit history.
These problems often feel like they're too much to possibly overcome. And since families that have experienced financial problems rarely have money to "cure" these old collection accounts, they certainly CAN'T overcome it right now.
Especially right after the crisis period, families are simply stabilizing their lives…. including their finances.
Think of this with a time-line:
1. Crisis happens
- You experienced a job loss, serious illness, divorce, business fails, etc.
- Start a crisis budget ASAP understanding that your finances will be impacted.
- You immediately take action and restrict your spending
2. Finances fall apart – the money flow into the home dries up
- Loan payments are made late or not at all
- Current expenses are paid late or not paid at all
- You maintain a crisis budget, trimming all extra costs
3.Turning point – money starts coming back into the home
- You obtain a job or you are awarded disability benefits
- You’re able to go back to work
4. Stabilize your economic stability
- Remain on slightly less severe crisis budget
- Save a planned amount EVERY payday.
- Save all that you can, to rebuild your emergency savings
5. Re-build your commercial credit history
- Using $350 of your re-built savings, and obtain a SECURED LOAN
- Usually available with a credit union
- If you have sufficient money to do so, open 3 SECURED LOANS
- Continue saving, which will pay off the secured loan.
6. Clear collection accounts to a zero balance.
Clearing those old unpaid collections is NOT the first step to re-building your credit and your financial future.
- First is financial stability,
- Second, establish and maintain savings,
- Third, obtain and repay three lines of credit - preferrably secured loans - NOT debt.
- Fourth, clearing collection accounts to a zero balance.
- Settling for less than full balance is OKAY!!
Questions? Contact Metro Community Development (810) 767-4622 x 0.
- SmartMONEY Workshops are available to help you improve your financial management
- Individual Credit Repair Counseling is available FREE