Rebuilding credit is not hard nor is it easy when you run into financial hardship such as most people are running into with COVID-19 but it is simple once you understand how to easily make changes to your report. You can always check your credit once a year for free at www.annualcreditreport.com and you want to check this first to see what is reporting negatively on your credit. Once you have this credit report you can now see what you need to tackle first. Below is a Step by Step on what needs to be tackled from easiest to hardest now this is what I did when I was going through hardships when we were in the financial crisis of 2008 so it is one of many ways you can rebuild credit on your own or DIY. 

1. Check your derogatory credit first and see what is truly yours and what isn’t. Sometimes these bureaus just throw things on your credit because you might have the same name as someone else. A perfect example was when a collection showed up under my name Jorge Magana but it turned out to be my dad’s collection since his name is Jorge Magana so you always have to check your credit periodically. 

2. Collections – If you have collections under your name that means that the original creditor has sold your debt to someone else for pennies on the dollar and they are now trying to collect for the original amount you owed when it was sold. The beauty of this is that 9 times out of 10 you can get these companies to satisfy the debt for a fraction of what you originally owed. So always negotiate and make sure you get something in writing from them that the debt has been satisfied. It is important to receive something in writing from the collection agency because you will send this document to the credit bureaus to remove the collection from your credit report.  

3. Paying down credit cards – You want to work your way up and what I mean by this is that you want to work on paying off the smallest credit card debts first and work your way up. For example – if you have 3 credit cards and the balances are $350, $670, and $3,000 and their minimum payments are $25, $45, and $115 Respectfully. What you want to do is pay off the lowest balance first and move those payments that you are already used to paying towards the next debt until you are fully paid off. 

4. Secured Credit Cards – Now you also need to start rebuilding your credit by reporting positive on time payments with not much use of your credit usage. If you have bad credit most likely credit card companies are not jumping over each other to lend you money but a secured card is the best way to start. Go to your local bank or you can go online to www.creditcards.com and search for secured cards. Usually, they require collateral and they will give you credit for that amount but it is a way to start rebuilding your credit.  Make sure you use this card just to build credit and not to live off of. Meaning once you get the card just use it to put a tank of gas in your card and pay it off right away. Do this for 3 months and move up to get an unsecured credit card. 

I hope this helps you as it did for me and if you have any questions please feel free to contact us at 407-637-5395.

Jorge Magana