If you have had serious credit problems but have managed to get through them by doing credit repair, then you need to work on 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 will have been updated or wiped away if you repaired your credit correctly.
But now you need to build credit. This is really important if you ever want to buy something ‘on credit’ again. This situation will not resolve itself. You must build credit so that you will have a credit profile that an underwriter will consider. If you don’t do anything for many years, then eventually you will have nothing on your credit report and you will still be considered “high risk” because the underwriters will have no way to evaluate you. Sometimes underwriters will look at your bank records and utility bills and your auto insurance bills to see if you make timely payments. They can use that information to consider extending 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 buying an old clunker and paying cash for it than taking on a high risk car loan. But by far the best option is to build credit.
There are two standard ways to build credit: 1) credit cards, and 2) small secured bank loans that report to the credit bureaus. Just be certain you get a loan that 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. Yes, you are going to have to pay for them in some manner. Just be sure you keep the balance paid off and use them sparingly. Don’t look at 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 have a car title or something else of value to offer them. Be certain they report to the credit bureaus. This is really important. You can approach your bank with an offer like this: Tell them you plan to keep the money that they loan you in an account at their bank and you will make the payments on the loan using that money. 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 back your credit! You are going to have to ‘suck it up’ a bit. In the end though, when you have rebuilt your credit, you will be glad you did!