Asking for advice....come one come all!

[babar]

I need advice on a money situation. I'm 29, and have a good job(not great, but it pays the bills with a little extra), but I've spent the last 6 or so years paying off some debt. I got a credit card, car, and moved out way too young, and my credit rating went down the tubes. Well, I finally paid off the last of my debt this check(yay!), and I was wondering what to do next.

How does one go about rebuilding credit? Has anyone ever gotten one of those secured credit cards? I was thinking of possibly getting one (with a low limit) and charging a bit each month, and paying it off in full each month. I feel that may be a good way to start. How else can I rebuild credit?

Anyone else ever been in this situation, and how did you start over?

thanks in advance,
Andrea

 

[ByTheSea]

I would recommend using a card only for those things you plan to pay cash for, and even writing the check out at the same time. Pay the card the DAY you get the bill, in full.

It's dangerous. You can't let yourself slide, but you want to rebuild credit.

Many many years ago I had a job were I saw credit reports. You would see the activity for the past 12 months (and "bad" activity stayed longer in another area on the report.) So if you have a couple of cards still open that you can rotate. Use one this month, pay it IN FULL. Then use another.... demonstate you are a good credit risk.

 

[babar]

The problem is I don't have any credit cards. I cut them up when I couldn't pay them off. And I understand what you are saying about opening a new one being dangerous, but I don't want to go back to the way I was before, so I would write the check out right away, just like you said.

thanks for the advice!

 

[DocRafiki]

Congratulations on paying off the debt! That deserves a big party! (maybe you can put a WDW trip on that credit card -- j/k)

 

[babar]

I settled with buying myself a pair of shoes I was dying for!!

(on sale and with cash, of course )

 

[RNMOM]

Babar,

Several years ago I got some really good advice about credit cards.

I use mine a lot but I take EVERY receipt and put them in my wallet. A couple times a week I enter them into my checkbook and subtract the amount I charged. When my bill comes, I mark them off in my checkbook and if I happened to miss one, I enter it. I never carry a balance and I have a card that gets me miles.

If you do consider using a card to build up your credit, perhaps this method can help you keep on the right path. It is an easy method and the book keeping is pretty simple. If you run out of check registers they will give you more free at the banks. Just have to ask.

Good luck and remember that paying your rent and utilities as well as car and any other debts off will also help build up your credit.

 

[Planogirl]

Pay your car note on time without fail and don't cause too many "hits" on your credit report. Carefully controlling a credit card is a good idea too. These bad items will drop off given time.

 

[dianeschlicht]

Simple is best. A regularily paid rent and car payment and no credit cards will build good credit the best way. It is also easier to budget if you go to an all cash operation. Be sure you don't get any overdraughts on your checking account either.

 

[Steve H.]

Diane's right -- simply paying all your utilities and rent payments on time every month will go a long way to improving your credit rating. A credit card will help as well, but make absolutely sure that those cards you cut up are officially cancelled -- otherwise, it's as if you still have all that potential credit in reserve.

In a little while, request a copy of your credit report and make sure that all your old credit cards are off the report and you've disputed anything on your credit report that you may have handled previously (your credit report sometimes isn't as up-to-date as your real life).

Sounds like you're heading in the right direction though -- congrats and good luck!

 

[tnkrbell]

CONGRATS!!!!!!!!!

I know how hard it is to get out of debt!! (We also got in troupbe with credit cards young and now we are finally out of debt)
I would say ditto to what everyone else has said!! But............
Since you sound like myself maybe waiting on getting another credit card may be a good idea!
I always say if I cant pay for it with cash then I cant afford it.
I have a check card visa so I can still use the convience of a credit card but it comes straight out of my bank account.
Good luck and be very proud of the hard work you did to get out of debt!!!

 

[elgerber]

Good for you! What has been advised so far is right, make sure all those old cards are closed and cancelled! If they are not, request it in writing and keep a copy of the letter that you send, and any response they send back. Then I would get 1 card to start with, even a deparment store card works, with a low limit (to keep you our of potential trouble). Use it for small but regular purchases and pay if off every month. You definitely want to show good credit history, this is a good way to do it. Some people think never having credit cards is good, but I am a loan processor and we have a had a couple of people apply and have a hard time getting a mortgage because they only had 1 or 2 items ever on their credit report.

Erika

 

[CajunDixie]

Officially cancel all the cc's you cut up. If you have one basic one....Visa or MC or Discover...then call them up and see if you still have any credit left with their company. Its much cheaper to work out a deal with an existing cc company than to pay all the fees with a secured cc. Look for a no annual fee card and work with them to re-establish your credit. Charge a few things like gas or groceries and delete those amounts from your checking right then. When you receive your first bill make 4 copies of it. Take the original and pay off that month's balance. Now say you charge gas and groceries again.....take one of those copies of your first bill and cross out the payment amount and write in what you have just charged and immediately mail in that payment. With 4 copies every payday you can make a payment and wont be tempted to spend what you've hoarded back in your checking while you wait for the bill to arrive.

And if you want to start saving a nest egg start using your cc to buy a savings bond each week or each month. These are not considered a cash advance and will help you save money and build your credit. Just know that all bad credit will stay on your report for 7 years....and unlike those commercials you see on TV cant be removed. At the end of the 7 years not only can you have your good credit back but you could have enough money in the savings bonds to put down a down payment on something such as a car or house.