Rebuilding Your Credit

by vbrasil on February 3, 2009

repair bad credit, santa clara bad creditIn Santa Clara County credit is everything.  A poor credit rating can affect your purchasing power and your ability to get a home loan. If you have a poor credit history there are many things you can do to restore your credit.  Don’t rely on paying these professional institutions to restore your credit.  Most of these companies are scams and offer guarantees that are unenforceable. 

Feel confident that with some diligence you can restore your credit yourself and through the process learn about creating a good credit history.

Make sure your credit file is accurate. Credit files are maintained by three credit reporting agencies—Experian, Trans Union and Equifax. You can contact one of them and request a copy of your credit report for a small fee. Review the report for errors and outdated information. If you feel that any of the reported information is inaccurate, you can request that the date be removed. The credit agency will contact the creditor who has 30 days to respond and confirm the disputed items. If they do not verify it, the date will be deleted. If the creditor verifies that the information is accurate, you can write a 100-word statement explaining your position and have the credit reporting agency include it in your credit file.

Contact your creditors. Some creditors will remove derogatory information from your credit file if you pay a full or partial payment towards the debt. They may also “re-age” the account by making the current month the first repayment month, thus showing no late payments. You can call the creditor directly to do this.

Add positive information to your file. Send information to the credit bureaus that shows stability and the ability to make payments on time. For any accounts on your credit report that do not show you pay on time, you can send account statements and copies of cancelled check to show your payment history, and the credit bureaus may add them to your history. If you have long-term employment, have lived in the same place for a length of time, etc., be sure to add documentation to your file that shows this stability.

Get credit in your own name.If you are married and your spouse has had financial problems, be sure that you establish credit in your name alone.

Re-establish good credit.If you have had credit problems in the past (especially a bankruptcy or a foreclosure), it is important that you re-establish good credit. There are several ways to do this:


  • Get a secured credit card. Many banks will, in exchange for a sum of money deposited with them, give you a credit card. Use the card and make the payments on time. Your credit rating can quickly improve.
  • Obtain a secured loan. If you have a passbook savings account or can open one, ask the bank to give you a loan against that money. They keep your passbook until the loan is paid in full. Make sure the bank reports on the loan to the credit bureau.
  • Work with a local store. Some businesses will give you credit on a purchase regardless of your credit standing. Although you may pay a higher rate of interest, this in another way of re-establishing good credit.
  • Satisfy judgments, liens and collections whereever possible. Make it a priority to satisfy any unpaid judgments, liens, and collections against you, or at the very least try to negotiate with these creditors.

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