How to Build Positive Credit

Consumers with bad credit pay more for everything, from high interest rates on loans to expensive auto insurance premiums. This often leads to a cycle of dependence on sub-prime products such as payday advances and high-interest auto loans, if you can qualify for a loan at all. You will break this cycle if you commit to giving your credit report a full "makeover," which requires a combination of perseverance, patience and time.

Instructions

1

Order copies of all three of your credit reports from Equifax, Experian and TransUnion and review them carefully. They are not identical, so an item that appears on one credit report may not appear on the others.

2

Make a "hit list." Prioritize, by date, the negative credit entries you found in Step 1, with the most recent bad debts at the top of your list. These items are doing the most damage to your credit, so they are the ones you should work to remove.

3

Contact the creditors on your "hit list" and offer to settle the debt---with the stipulation that you will only pay the debt if the creditor promises to remove the negative item from all three of your credit reports. Be firm about this, and insist on getting it in writing. If a creditor refuses to agree to your terms, ask to speak with a supervisor. If that doesn't work, call back another day.

4

Use the credit you have. "Insert" as much positive credit as you can into your credit history. Just as every delinquent payment becomes part of your credit history, so does every on-time payment. Charge only $10 a month on a card and pay it off; that's one more positive payment added to your report.

5

Get easy credit. Secured credit cards--lines of credit that are usually equal to a deposit in a savings account at the issuing bank--are a great way to insert positive credit into your reports. Nothing on your reports indicates that it is a secured card. Also shop around for small lines of credit with retailers such as Crown Jewelers, who do not pull your reports. The line of credit might be small, but it is yours for the asking.

6

Watch your reports like a hawk. Order new copies of your credit reports at least quarterly and check for errors. Make sure items that you have successfully deleted are, indeed, deleted. As you insert positive credit monthly and bad items begin falling off, you will see your credit score steadily rise.