Ever noticed how the moments seemed to stretch on whenever waiting for a credit approval, especially when you have less than perfect credit? Ruth DaMarcus knows that feeling. After her divorce, her credit rating plummeted, and applying anywhere for credit became an embarrassing situation.
“I never knew when I was going to get approved or rejected,” DaMarcus said. “Most times, I was rejected. I knew I had to fix my credit, I just didn’t know how or if it was even possible.”
Yes it’s possible, according to several bankers, lawyers and financial experts. They say by taking an aggressive approach a person can fix his or her credit within two years.
Keep your spending in check
The trick is avoid future financial problems, and sticking to a budget. The WaMu personal planning center suggest spending at least two months writing down every expenditure, and at the end of each month compare your total expenses with your income.
“If you’re overspending, you have to cut back or find more income,” the center advised. “As best you can, plan how you’ll spend your money each month.”
Know what’s in your credit report
You are also going to need to order a copy of your credit report to determine what’s inaccurate or out of date, and then request that the credit bureaus fix the information. Everyone is allowed at least one free credit report each year. To order your free report, go to www.annualcreditreport.com, and either order your report directly or download a form to mail in your request. You can also call 877-322-8228.
You are also entitled to one free copy of your credit report each year under any of the following circumstances:
- You’ve been denied credit because of information in your credit report and you request a copy within 60 days of being denied credit.
- You’re unemployed and looking for work.
- You receive public assistance.
- You believe your file contains errors due to fraud or you are (or you think you are) a victim of identity theft.
- You’ve been denied employment (or another adverse employment decision has been made) based in whole or in part on information contained in a credit report.
- Your report has been revised based upon an investigation you requested.
If you’ve already ordered your free report for the year and don’t fit into any of the six circumstances, you can still order a report from websites like freecreditreport.com.
Look over the report and try to bolster the negative information with some positive ones. Send copies of recent statements and copies of canceled checks to credit bureaus to show you pay on time for accounts that might be missing from the report. Also have your employment history, place of residence, phone number and date of birth added to your report. It could help to show a sense of stability.
Pay as you go
Another way to accelerate the rebuilding process is by having at least three active credit lines open. It’s true that it takes credit to build credit. Car loans and mortgages go a long way to rebuilding credit. However, if that’s out of reach try getting a store card or gas card. They are easier to get than major credit cards. You can also consider getting a cosigner or applying for a secure credit card. Websites like AccountNow and All-Access make it easy.
Finally use the credit you obtain monthly. It doesn’t help if it’s sitting in your wallet. Make small purchases and pay them off to avoid interest charges.
The experts say by following these steps, within two years a person can repair their credit to the point they won’t be turned down for a major credit card or loan, and in about four years qualify for a mortgage.
That’s good news for DaMarcus. “At least, I know it’s not hopeless,” she said. “I just have to try.”