Let’s face it. It happens to the best of us. Those small private loans we take out to buy a new wardrobe and the tremendous amount of credit cards we apply and max out but never pay off can have a serious negative effect on our credit history. Freshman year it may not matter so much but as graduation looms and we begin applying for other things such as apartments, financing a car, and other loans the damage can definitely be seen. The best part about it is that you’re young and the problem can definitely be solved. Once you know your credit score or better known as your FICO score (you can view it on www.FICO.com), you’ve viewed your credit reports (you can get a free copy of each report once a year from the three credit reporting bureaus Equifax, Experian, and TransUnion) and realize that it’s not where you need it to be you can begin to repair and rebuild.
First, dispute anything that you don’t recognize or know is incorrect. Instructions for disputing any errors are listed on the credit reports themselves. Second, clear up any debt you may have. You want the balance for everything to be $0, meaning you’re in the clear and currently owe no money. If your debts are out of control and can’t be cleared up so easily call the companies and arrange to have a payment plan set up which allows you to make manageable payments. Once loan, credit card, and other debts have been cleared up you can begin to repair. Whatever you do, DO NOT cancel out any credit cards you have. Once your credit card balances have been paid off keep the cards open. Any other forms of credit that you apply for in life will want to see that you have a high amount of available credit. If it’s a credit card you don’t use just cut up the card and forget about it. You’ll have available credit but won’t have to worry about maxing it out or over using it.
Let’s slowly get your credit up into the 700 Club. If you have any credit cards that you still use frequently keep those. However, make sure they’re credit cards you believe that you’ll be paying off regularly (the full balance should be paid off 3 – 7 days before the bill is due so your payment processing isn’t delayed). A good rule of thumb is to only spend the amount on a credit card that you currently have in your checking account. This way you don’t overspend and stay on top of your bills. If you don’t have any credit cards that you like then cut them up and begin looking for new ones. The more credit cards you apply for the more damage you do to your credit. No company wants to look at your credit report and see that in February you got desperate and applied for 10 credit cards in that month.
Instead, apply for a credit card that is geared toward students and/or people with average credit. Apply for 3 at the max and if you get denied from all three apply for a secured credit card. This is a credit card that you put a down payment on and the down payment is used as your designated credit limit. If you put $300 down as a security you will have a credit limit each month of $300. In about 6 months the company may return your down payment and upgrade you to a normal card, granted you make on time payments and use the card wisely. If you can’t get approved for anything then wait awhile. The fact that you’ve cleared up your report will begin to show once each individual company clears your payments and have marked you as having a $0 balance.
The key to keeping your credit building up and not being destroyed is not applying for too many forms of credit, paying your bills on time, and monitoring it for anything you aren’t aware of.
Shaquana J. Chaneyfield (www.shaquanajaneec.wordpress.com)
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