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Fixing Bad Credit
Penguin_Otaku
Registered User regular
Registered User regular
Didn't want to hijack the other guy's thread.
So I made some poor decisions with my credit card my freshman year. Maxed it out and had to default on it and settled for about ~1000 less. With an invoice I have coming in, I will be able to pay it off in full and just have my student loans to deal with in a year, huzzah.
But I know that I'm going to need some kind of credit in the future. Obviously the debt collection agency coming after me was not the most ideal thing for my credit or myself. Although embarrassing it was a wake-up call and I'm getting my shit taken care of and planning for my future a little better.
I applied for the smallest credit card from my bank (Chase) recently and was denied. I cannot say I was surprised considering what my credit report probably says.
When I pay off that credit card and another (only ~200), will I be more likely to get that card from my bank?
I didn't understand what the purpose of a credit card was for, abused it and am looking to use it the "right" way this time.
Obviously paying bills and similar things helps build credit, but what else in your guys' experience has helped you through a similar situation?
Thanks.
So I made some poor decisions with my credit card my freshman year. Maxed it out and had to default on it and settled for about ~1000 less. With an invoice I have coming in, I will be able to pay it off in full and just have my student loans to deal with in a year, huzzah.
But I know that I'm going to need some kind of credit in the future. Obviously the debt collection agency coming after me was not the most ideal thing for my credit or myself. Although embarrassing it was a wake-up call and I'm getting my shit taken care of and planning for my future a little better.
I applied for the smallest credit card from my bank (Chase) recently and was denied. I cannot say I was surprised considering what my credit report probably says.
When I pay off that credit card and another (only ~200), will I be more likely to get that card from my bank?
I didn't understand what the purpose of a credit card was for, abused it and am looking to use it the "right" way this time.
Obviously paying bills and similar things helps build credit, but what else in your guys' experience has helped you through a similar situation?
Thanks.
Penguin_Otaku on
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But yeah, someone cosigning for you on something is going to be ideal in this situation. That and time.
As others have said, cosigning with someone with better credit such as a parent is a good option for you. Just make sure you can repay the debt, as it'll affect the cosigner's credit too. If possible consider taking out a small personal loan with a term of twelve to twenty four months. Paying off (as in completely, not just making your monthly payment) any kind of debt improves your rating, and a couple of small principal/short term loans can help demonstrate to future creditors that you're more likely to honor your agreement with them.
Defaulting on your card will hound you for years to come. While seven years is generally the limit it will appear on your score, be aware it may still affect a creditor's willingness to deal with you.
And to clear up some confusion, while paying your bills on time is frequently mentioned as a way to improve your credit score it usually only applies to debts such as credit cards and loan payments. A utility company may report late payments, but many don't bother.
So keep you nose clean, and if revolving credit providers are denying you it's just going to take extended time without bad stuff showing up on your credit report before your credit rating improves enough to get approved. Maybe get a report done so you can see what actually gets reported. Then try again in 6 months and look for a secured card or perhaps a gas card. I still use sites like freecreditreport.com to get the credit information (sans the score number) and just cancel within the 7 day trial period), but if you haven't pulled your own credit report in the last 12 months you could go to annualcreditreport.com and get it free without having to put in your card information. You cannot get a credit score number (if that's what you're looking for) without paying for it (bout $25-30 to get scores from all bureaus).
A lot to improving credit score is going to be time passing without bad things being reported to the bureaus, it's not something you can actively improve other then paying down balances that report monthly and even that is only incrementally better then time passing without bad stuff happening.
Why are you applying for credit cards when you are in debt? At this point in your financial life you shouldn't be looking at more cards, but rather building a solid financial footing on which to stand on. Also, every time you apply for credit your score lowers.
Also, most bills don't help build credit (except for loans). When a private corporation, like a celphone service provider, receive your payment they don't report timely payments to federal institutions that handle credit. However, excessive late payments and deliquent accounts will always be hurtful to your credit, no matter who you pay (federal or private).
Had I been approved it would have sat in my wallet unless it was for an emergency.
When you do get a card, don't do this. An idle line of credit is of no use to you. Instead, buy the occasional thing and pay it all off when your monthly bill comes. Many people use cards like this for big purchases, such as new appliances. The best sort of card to use for this purpose is one without annual fees, however those are generally only offered to people who meet certain criteria.
I don't think that's correct. I have one credit card I almost never use, but my credit score still went up a bit after I got it. Also, one time when I was checking one of my free annual credit reports, it listed "having two or more credit cards from major credit card companies" as one of the reasons I had good credit.
Just go to annualcreditreport.com and view one of the three reports to find out what's up with your credit.