Credit, credit, credit….
Did I say credit?
Well, it’s important. Let me tell you… A lot of what you can do in life financially will revolve around your ability to responsibly repay debt obligations.
Now, of course you don’t have to repay, and of course no one has to loan you any money either—But why would you want to do that? You need that leverage, right? No, I’m telling you that you need it! Really.
Now, I may have touched on this in previous post because up until this point we have been talking about corrective side of credit management. In some future posts I will be discussing more of the preventative side of things. But for now, let’s talk about re-establishing bad credit history.
Re-establishing your credit is important. Your credit file and can be damaged and rebuilt over, and over, again. There are some debts that may or may not go away, but you have a means to rebuild and re-establish a good credit history, contrary to popular belief. Opening new accounts responsibly and paying them off on time will raise your credit score in the long term, which is why I say that no matter what your credit looks like you always have access to credit. Using secured cards are the primary way to help open and establish lines of credit and can be a starting point.
To re-establish your credit simply means that you are starting the process of re-committing to handling credit responsibly. Being responsible is a tough concept for a lot of people to grasp, but if we all were responsible in life, all the time—we would have so much more abundance. Of course, the large lending institutions make money off of our imperfect human tendencies to not pay things on time. It’s a system that is designed to allow you to win big, when you’re responsible, and a system that will cause you to fail when you don’t.
Problem: You need to re-establish your credit after repossessions, foreclosures, discharged credit card debt, and collections.
Solution: If you have severely damaged credit I would suggest finding a credit restoration professional, such as myself, to help with working on removing derogatory items. You want to get as much off of your credit as possible, while at the same time re-building your credit file by adding new accounts. The new accounts—typically secured credit card accounts because that’s probably the only thing you can get approved for—will help you get started on that. The more positive lines the better, but it does take time to establish. I would say 6 to 12 months to be fair. I would also focus on removing items that are outside of the statute of limitations (7 year period for bankruptcies and collections for example). We want the report to be clean!