How To Rebuild Really Bad Credit
Rebuilding credit is probably one of the most popular questions I receive. I created a post on my InstaStory and received over one hundred reposts & messages. If you don't follow me on Instagram go ahead & swipe over to IG and hit the follow button on @akirajdixon.
Now. Let's get to it.
Rebuilding credit is going to require a few things. Patience, consistency, effort, & money. Yes, money. If you don't have the funds to assist this process you might as well exit this blog post now. This post is really designed for those who are coming out of bankruptcy, struggling with low scores, or looking to make a purchase soon with very few good lines of credit reporting on the credit report.
You've all heard of secured cards I'm sure. Secured cards require you to put down your own cash in exchange for a credit card usually with that amount you put down as the credit limit. The recipe to good credit calls for 3-5 lines of revolving credit. Revolving credit is a credit card. Yes, 3-5 lines. So open not one but two. You can grab two secured cards HERE. Once you receive those secured cards auto draft one utility bill or your cell phone bill off ONE card. The other card should be used strategically for gas purchases. All balances should be paid off by the statement's CLOSING date, not the bill's due date. This ensures that the balance reported to the credit bureaus will be $0 which gives you the maximum amount of credit scoring points. After having these two secured cards for 60 days apply for another secured card HERE or HERE. This card should be strictly to maintain personal toiletries or household items. Again, pay off the card's balance by the statement close date and on time. You should not be carrying debt. Credit isn't about debt unless you make it about debt.
After you've added those three lines of credit you should reach out to someone in your family that has good credit. I recommend a parent or someone who is really particular about their credit. You will become an authorized user on one or two of their credit cards. This is important because their behavior will impact your behavior. I recommend someone who has a credit history that is at least 2-3 years longer than yours. Their years of history will be added to your report and that gives you a credit score increase. You now have 5 solid lines of revolving credit.
Next up is adding an installment loan. A mixture of credit account types (installment, revolving, mortgage, auto, etc) gives you more credit points which is what you're chasing. Open a Self Lender account here. It gives you the ability to loan yourself cash, they'll report it on your behalf to the credit bureaus, & you get your cash back once the loan is complete. The key here is to pay on time each month.
You've officially obtained all the necessary ingredients for building the best credit score.
The advice I am about to give you now is the most important aspect of the process.
Do not apply for any other lines of credit, do not ever MISS a payment, do not ever PAY late, and do NOT excessively charge anything other than what I've listed above to your credit cards. You should not cosign for anyone. You should consolidate or contact the servicer of your student loans to bring them to a positive standing. If you suffer from any other charged off accounts I recommend settling those accounts or scheduling a session with me HERE to weigh your options. The same for collection accounts.
You are officially on your way to pretty amazing credit.
- Akira J. Dixon