How to Rebuild Your Credit

There it is. The car of your dreams. Your mind begins to wonder as you gaze at the beautiful shine of the car. You imagine yourself in what could be your new automobile. Your hair blowing in the nice air conditioned atmosphere, as you pass the on-lookers staring at your new four wheeled beauty. Suddenly you are snapped out of your daydream by the voice of the salesman and his ever so common words, "Can I help you." You begin to inquire about the price of the car. You go back and forth on the details. Then he ask you to come to his office, to see what he can do for you. You decline. You already know what the outcome is going to be. You have been through this scenario before and the answer is always the same. Denied!! This is typical for many people that have poor credit. In today's world you can hardly do anything without a good credit rating. Think about it. You can't get a car, credit card, or home with having a good credit rating. In this article, I want to explain to you how you can improve your credit score by using simple to follow techniques. Lets begin.

Step 1: Get Rid Of Bad Debt

The first step you need to take in repairing your credit is to pull your credit report and take a look at all of the debts that you have, whether old, new, or current. Now the debts we want to focus on are the debts that you have not paid on for at least 3 month or more. Usually these debts have been turned over to collections or are charged off. Take these debts and list them from least to greatest. Now what you want to do is pay these debts off as quick as possible. You will found out that most of the creditors would be willing to make a settlement offer with you. For example, If the amount that you owe is $1000.00, some creditors will take a settlement offer for maybe $500 dollars. It is up to you to contact the creditors and let them know about your situation. You have to put forth some sort of action to get your credit resolve. Also, do not call up the creditors until you know you have the money to pay them.

Step 2: Get A Credit Card

Now that you have repaid all of your old debts, it is time to rebuild your credit. Paying off old debts does not rebuild your credit, it does help not to have those things on there, but the only way to rebuild your credit is by getting debt. I am going to show you a way to use debt wisely to build you up great credit. The first thing you need to do is to get a credit card. The credit card limit should be no more than $500.00. You can get these type of credit cards anywhere online. Just go to google and type "credit cards for bad credit" or "credit cards to rebuild credit", something of that nature. Most of the times, these companies will approve anyone for a credit card. Make sure you only sign up for no more than one. Also, you want to make sure that the credit cards report to the three major credit bearues every month. This is very important to the rebuilding of your credit.

Step 3: Rebuild Credit

Now that you are approved for a card, here is how we are going to use it to rebuild your scores. The first thing I want you to do is to set a limit to only spend half of what's on your credit card. You never want to spend the whole credit limit, it is damages your credit very badly. So if you have a $500.00 limit, then you only want to spend $250.00. Second only use the credit card for necessities. For example. I only use my credit card for gas. Here is what I do, I put the gas on my credit card, and the money I was going to use for gas, I put it in an envelope. So once I've spent up to $250.00 in gas, and I have that same equivalent amount in the envelope, I get a money order, and when the bill comes, I pay off the balance using the money I have saved. If you do this every month, within a 6 month time period your credit will be excellent.

There you have it. That is my whole system to rebuilding your credit. It is simple but it works well.