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Repair Credit
How to Strengthen Your Credit
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There are no "overnight"
solutions to rebuilding your credit rating. You have to convince creditors that you've
cleaned up your act and improved your credit habits -- something that may take as long as
two years. With a little effort and know-how, you'll be able to repair your credit and get
back on track.
Here are many steps you can take to help strengthen your credit rating:
1) Clean up your record. Your
first step is to correct any mistakes in your credit report. Examine it for minor errors
or other significant inaccuracies. See our article "Making
corrections to your credit report" for more details on how clean up your record.
2) Add positive information. If you have accounts that have been paid on time and
aren't listed in your credit report, add them. Send the credit bureau account statements
or canceled checks to show proof of your payment history. You'll also want to add any
personal information such as name, address, employment, or date of birth if they're not
already included in your report.
3) Get credit. Start building a positive credit profile by applying for
gasoline or department store credit cards. They are easy to qualify for and will not break
your budget if you use them sparingly -- as long as you pay your balance in full and on
time. Make sure you keep your accounts active for at least a year to show you're capable
of making payments.
Get a friend or family member you trust to add you as an "authorized user" to
one of their credit accounts. You will receive your own credit card for the account, but
it's probably a good idea to simply return it to the account holder. This account will be
reported in your credit file, and as long as you or the account holder don't default, the
activity in the account may add a few points to your rating.
Another method is to apply for a secured credit card. With this type of card, you deposit
a sum of money with a lender and are given a credit limit usually equal to the amount you
deposited -- in some cases, more or less depending on the lender. If you use the card
responsibly and pay your bills on time over an extended period, many lenders will allow
you to convert the secured card into a normal credit card.
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