2torial #0533:
Learn2 Clean Up Your Credit Report (continued)

Build credit

Recent, positive marks on your credit report can lessen the effect of earlier negative ones. So, if you're feeling frustrated over the few credit card payments you missed 5 years ago, or the checks you bounced while in college, here are some things you can do to show potential creditors that, despite these trespasses, you're a good risk:

Pay bills on time. Pay at least the minimum amount due on each loan or credit card each month. Your goal is to develop a history of responsible bill paying. A credit or debt counseling service can also help with advice and budgeting strategies. Some offer consolidation loans at low interest rates.

Keep some accounts active. Even after you've paid off a credit card, keep it active instead of canceling it. Using it each month to charge $25, and then paying that amount off in full, will help establish a repayment pattern that reflects well on your report. If you cancel the card, you'll lose a means to prove to creditors you're a good risk. Limit this to one or two cards, though, as it's easy to dig yourself into debt.

If your credit is bad, and lenders won't take a risk on you, there are still things you can do to build credit, including:

Get a secured credit card. Banks offer secured cards to customers who have cash to use as collateral against the credit limit. For instance, if you have $2,000 in a checking account, you may get approval for a credit card with a limit of that same amount--it will, however, freeze the $2,000 for the length of the time you keep the card active. Secured cards are a means to build good credit history, and once a bank has seen that you've handled the responsibility, you can eventually apply for a regular card.

Have someone co-sign a loan. Recruit someone with solid credit to co-sign an automobile, house, or personal loan. Pay off the bills responsibly, and in time your credit history will improve.

Consider debt consolidation. Talk to a credit counseling service about merging all your outstanding debt together, so you receive only one bill (often at a lower interest rate). Be aware, though, that consolidation can look negative on your credit report, depending on how lenders choose to report it. Before consolidating, phone each of your lenders and ask them how they report such an action.

There's no time like the present to start the process of cleaning up your credit report. It may be frustrating, even a little intimidating at first, but think how good it'll feel when the only thing left to clean is your dishes.

-end-