Building New Credit

One gauge of your creditworthiness is having three open trade lines with twelve months of good payment history. Get three credit cards for example and use them responsibly for a year. Even if the only things you charge are your groceries and gas for your car. Always pay timely, don't fall into a poor credit rating after all of the hard work it took to get you back on your feet. You may have to get a secured credit card, that is where you place a deposit with the issuer and they issue you a card, eventually after showing you will pay on time they will return your deposit and increase your credit limits. You can get a new start with a new credit card here.

Go to your bank and get a $10,000 loan. It is very easy, let me explain. You borrow $10,000 from your bank to buy a $10,000 certificate of deposit (CD) from them. You pledge the CD as collateral for the loan, they hold the CD for safe keeping. You will have to pay a small spread on the loan, ie. the CD rate pays 5% and the loan is at 7% so your cost is 2%. You will want to pay the interest payment monthly so there is a pay history on the loan, the balance of the loan is due when the CD matures.

Make sure that your bank agrees to report the loan to the credit bureau and request that it is listed "secured" and not "secured by CD". This will work with any amount of money but a million dollar loan cost a lot of money in interest. Your credit scores will improve with your good payment history.

If you would like to get a free copy of your credit report right now,