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Have you had serious credit issues but managed to get through them with credit repair? Then you need to start building positive credit. There are a couple ways to do this. If your credit repair letters were successful, all three of your credit reports should look much better now. There shouldn’t be as much ‘derogatory’ credit on your reports. Accounts should have been corrected or wiped away if you repaired your credit properly.

But now you need to build credit. This is really important if you ever want to purchase something ‘on credit’ again. This situation will not resolve itself. If you don’t build credit, you will not have a credit profile that an underwriter will consider. If you do nothing for several years, then down the road there will be nothing on your credit report and you will still be considered “high risk” because the underwriters will have no way to judge you. Sometimes underwriters will look at your bank accounts and utility bills and your vehicle insurance bills to see if you pay them on time. That info can help them decide whether or not to extend credit to you, but you will still be considered high risk and therefore will not qualify for the better loans. High risk loans have high fees attached to them and high interest rates most of the time. You would do well to avoid those kinds of loans because you won’t be able to pay them down very quickly. You could easily end up ‘up side down’ on your car loan if your interest rate is 25% for 6 years. Do yourself a favor and never put yourself in this situation. You are better off picking up an old beater and paying cash for it than taking on a high risk car loan. But by far the best option is to build credit.

Building credit is usually done in two ways: 1) credit cards, and 2) small secured bank loans that report to the credit bureaus. Whatever you do, make sure the loan you get will report to the credit bureaus. If it doesn’t, you are wasting your time. There are a lot of ‘second chance’ credit cards available. Of course, you are going to have to pay for them in some manner. The key is to keep the balance paid off and use them sparingly. Never think of a credit card as free money. They certainly are not free money.

You could be able to get a small loan from your bank if you can offer them a car title or something of value. Make sure they report to the credit bureaus. This is really important.  You can approach your bank with an offer like this: Tell them you will keep the money that they loan you in an account with their bank and you will use that money to make the payments. Get a 12 month loan. If it is $500, even if they charge you 25% interest it will not cost you that much per month, and you are buying your credit back! You are going to have to ‘suck it up’ a bit. In the end though, when your credit is rebuilt, you will be glad you did!