13 May 2015
Getting Credit When Your Credit Report Looks Bad

Maybe you missed some credit card payments, went on a shopping spree with your first credit card, or had a spouse who ran up bills without telling you. A lot of honest, hard-working people have bad credit. These same people need credit to buy online with a credit card, secure a car loan, or obtain a mortgage – getting credit is hard if your credit report looks bad.

So, what can you do when lenders say “No way” and credit card issuers aren’t going to take another risk based on your bad credit report?

Here’s how to earn the credit you deserve – even if you made a few mistakes in the past.

1. Pull your credit history to see where you stand. The three main credit reporting agencies are Equifax®, Experian®, and TransUnion®. You’re entitled to a free credit report once every 12 months. Go to www.annualcreditreport.com to request a free report from the three major agencies, then examine each of them carefully. Most credit information appears on all three credit histories, but sometimes a lender may only report your payment history to one or two of these reporting agencies.

Are there mistakes on any of the reports? If so, notify the reporting agency and ask that any mistakes you identify be fixed ASAP.

You’re also entitled to a free credit report if you’ve been turned down for a loan. Track your credit history. It’s important.

2. Be patient. It takes time – months and even years – to develop a clean credit history. Making two or three credit card payments on time is not a credit history. If your credit report is a mess, expect that it’s going to take some time to scrub that report clean again.

3. Get a secured credit card. A secured credit card won’t fix your credit problems overnight, but it’s an important first step to demonstrating you’re a good credit risk. With a secured credit card, you deposit cash into the credit card account. That cash is then used when you make a secured credit card purchase. Sure, you’re spending the money you already deposited, but you’re also demonstrating your ability to manage credit by building a payment history.

4. Keep trying. If your credit history is really bad, you may be turned down for any kind of credit – even a low-balance credit card. Don’t give up. Keep looking for a lender or credit card issuer who’s willing to take another chance on you. You’ll probably pay higher interest because you’re a higher risk to the lender, but you’re also building a clean credit history every day.

5. Checking accounts aren’t just convenient. In many cases we need them, but a bank isn’t required to provide check-writing privileges, especially if you have a miserable credit history. If you get turned down for a checking account, ask to see your ChexSystems report. ChexSystems tracks checking accounts the way credit reporting bureaus track credit card activity. Find out why you were turned down for a checking account and see if there’s a way to fix the problem.

6. Take advantage of credit improvement opportunities. For example, Nevada State Bank offers several programs to restore your credit standing.

Fresh Start Checking offers consumers who’ve had credit problems in the past a chance to demonstrate that they’ve learned how to manage money. After successfully completing a class on checking account management, Nevada State Bank will open a Fresh Start Checking account for you to help build up your good credit again.

Another opportunity offered by Nevada State Bank is the A Home Of My Own program. This course is offered to families and individuals who have not been able to obtain a mortgage. Upon completion of the course, you’ll receive a Housing Education Certificate indicating that you’ve learned and understand the responsibilities of home ownership. This course and certification may be a requirement of lenders and down payment assistance programs.

Completion of these courses may indicate to prospective lenders that you’re serious about cleaning up your credit. Classes are held in English and Spanish, you can register at a Nevada State Bank branch near you, and classes are held in cities acrossNevada to make it easy for attendees to learn more about responsible money management.

If you’re turned down for credit, you can improve your chances in the future by improving your credit report, paying down debt, making regular on-time payments, and even attending classes where you’ll discover the basics of money management.

It takes time, but you can make yourself a more attractive candidate for a loan in the future.

 

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice.

 

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