Where is the best place to start on repairing credit?

Where is the best place to start on repairing credit ?

The Answer : The best place to start repairing credit would actually be to know what makes up your credit score:

1. Payment history-35%

2. Total debt owed vs. available credit-30%

3. Length of time establishing credit-15%

4. Inquiries and New accounts-10%

5. Types of credit established-10%Now with that said, you can see what's affecting your credit the most, and in this case late or missed payments, since it affects your score the most. If you haven't gotten one already, you should open a checking and savings account.

This does many things; it establishes a banking relationship which as an accountholder will make it easier to gain access to their products like loans and credit cards, it helps you manage your money, and finally it gives you the most powerful tool in building credit, a means of paying on time. Make sure to start paying on time on open accounts and make arrangements to take care of delinquent accounts.

Try to negotiate a "pay to delete", which is a payoff, sometime which usually can be a full amount in exchange for getting it removed from the report altogether. While paying off a debt in collections can reduce the total debt you owe (#2), it still may not be enough because the derogatory listing on the account which is still hurting the score. Here's a series of links that shows how to negotiate

http://www.creditinfocenter.com/debt/set...

http://www.creditinfocenter.com/debt/neg...

http://www.creditinfocenter.com/debt/Can...

http://www.creditinfocenter.com/debt/Act...

Also, this would be a good time to look over the report and check for any accounts that might not look familiar and any other inaccuracies that may appear, It happens all the time, inaccurate information causing scores to be much lower than they should. Just because you think you have bad credit, doesn't necessarily mean that it has to be THAT bad. So with that said, dispute incorrect items with all 3 bureaus.

If you have any open accounts, to correctly build credit takes more than just paying on time. It also means to paying down balances as well. The next thing that affects credit is having high balances and low limits on credit cards. The scoring system allows 25-35% of combined available credit to be used at any given time. So, it's impotant to stop using the cards and pay down the balances. Now what I mentioned earlier is if there any credit cards that were still open.

If that's not the case and you're needing to start with new cards, then start with a secured credit card. There's a reason for this. Now you would have to put a deposit upfront that would be used as collateral, but it would secure you a line of credit, which is important to get approved for a credit card that you can easily get becuase it's like a catch 22: regardless of whether you're approved or not, when you apply for credit, it creates a "hard inquiry" that lowers your score(see #4).

By getting a secured card, you give yourself the best chance of getting approved without burning up points trying to apply for credit that you nornally won't get with a low score. Now some tips with secured cards: 1. PAY ON TIME 2. Make small purchases a month (like $20/month), and pay it off, and 3. Increase the credit limit by adding to the deposit, which looks good on a report, because you need to create a cushion between the total debt owed and the available credit (see #2).

Usually after a year or so, the card either converts to a regular card or a better card is offered altogether and more importantly, the deposit is no longer needed and is given back. You could repeat the process with another secured card if you like, but as long as you have at least 3 open credit card accounts, you should be fine. Another thing you should do would be to try to open an installment account. You could do this by opening a secured loan with a bank.

It works just the same as the credit card the only thing it's a loan. The proceed from the loan should go into a short-term certificate of deposit. The length of the CD should be slightly shorter than the length of the loan, so the money would be avaiable in the event it needs to be paid off. I would try to do small amounts, like $500 for example, but no more than a $1000. That would be another way to build new credit.Hopefully my answer will point you in the right direction

Good Luck!