04 Sep
2010

Occasionally, a major life problem – such as bankruptcy or foreclosure – ruins your credit rating. When this happens, you will need to rebuild your credit history from scratch. Here’s how:

1) Take it slow. Start by rebuilding your life gradually, and give yourself lots of time. Find a modest place to rent and focus on paying all your bills on time. Time and prompt bill payments will help rebuild your credit score, although it will take months or even years. When it comes to credit repair, though, time is your friend.

2) Avoid debt. If your credit has dropped dramatically, any new credit will likely involve bad credit personal loans, payday cash advances, and other high-interest loans. These loans will be expensive, which is not what you need right now. Also, carrying a debt load will just add to your credit score woes. For now, pay for everything in cash.

3) Start saving. A savings account or buffer account builds your confidence and your net worth. It also ensures you’re not reliant on expensive emergency loans if a financial emergency does take place. Start small if you have to, but start saving.