How to repair bad credit?

To start off with I have absolutely no credit in my name. I'm not working as of right now but I've tried to get cards in the past to build up my credit but those were a no-go. So all credit my husband and I have is in his name.

Anyway, we made some poor choices and got ourselves in debt(over $3000) when we first got married. We did pay that off after my husband came back from deployment. In the past couple of years we repeated that cycle and had two credit cards that totaled just over $2,000. We did pay those off this year with some of our tax return. Right now we have a Target card open but it only has a $500 limit and we are working on getting that paid off as well.

We have two vehicles that we pay on monthly(always on time) as well as a few other bills(cable, phones, insurance) that get paid off fine. We do not own our home nor do we pay any utilities.

My question is(finally) how do we work on rebuilding his credit from here? Do we keep those other cards we've paid off open or do we close the accounts? I noticed the last time we looked at his credit report that it said some things have revolving credit. What is the best way to sort all of this out and get back on the right track? We would like for it to be in decent shape by the time my husband gets out of the Marine Corps which will be in 2011(maybe).

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  • 1 decade ago
    Favorite Answer

    To start, it may be in your best interest to get a secured line of credit. Most banks offer this product but they do require a small deposit to get the account going.

    For your husbands credit, keep paying those bills on time. No need to close out those accounts, creditors like to see that other people have trusted you with loans. The more available credit you have the better though, so don't max everything out. They say it's good not to spend over half the credit limit.

    Revolving credit is credit that you pay towards but you also spend against. Like a car is an installment loan because you just pay towards that.

    In short, keep using your credit but minimal amounts and make sure you pay them all on time. By the way, it may be a good idea to close the Target account, Department store cards don't really do too much for you credit wise

    Source(s): Financier
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  • 1 decade ago

    Pay off the rest of the credit cards but don't close any of them. Use the credit cards every 3 or 4 months to keep the accounts active. Pay the cards in full when the statement comes. This will continue to build a good payment history.

    Running up the credit card balances hurt your score, but paying them off gives your score a boost. As long as you didn't have any late payments, your credit history should be just fine.

    Revolving credit is basically credit cards -- open ended. Installment loans are a set number of payments and the loan is paid off -- like a car loan. They are treated differently in credit score calculations.

    Continue to pay off the cars and make sure all the payments are on time. Paying the cars off early won't help your score but you would save a lot of interest. Make payments on installment loans for at least 18 months to get the best score impact.

    Your husband should add you to those credit card accounts as an authorized user, if you are not already. This will help build a credit history for you as well.

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  • Anonymous
    1 decade ago

    First, close the Target card. If you want, open a card in both of your names and keep the limit very small (about $200 or so) and strictly use it for something that you NEED every month (gas, diapers, food) and nothing else. Pay it completely off about every other month. That will really help with rebuilding your credit.

    At this point if you don't have very many bills, just save up some money every month and set that aside. If you are trying to rebuild your credit to purchase a home, good credit and a decent down payment (at least 5% of the house's purchase price) will be a great asset. Try to pay off things faster, especially your car payments. That will help very much.

    Hope that helped!

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  • 1 decade ago

    His fico score will also depend on his income to debt ratio. How much money he gross and the amount he needs to spend on his debt. It would greatly increase his fico score if he owed 50% or less of his credit limit. If he has a $500 limit on his target card, don't exceed $250 balance. I would pay if all off but leave two cards with a balance. Too many cards can hurt his fico score also. You can pay into a secure card to build your own credit. I don't see why you can't just get a regular card approved but with a co-signer. The longer you have a card or loan the better your credit score will be so don't close the cards you have the longest. Building credit will take time. As long as you keep paying everything on time and pay a little over the minimum payment, your credit will eventually go up. It took me a while to build my credit also.

    Source(s): own 2 homes, two car loans, credit score 800
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  • 1 decade ago

    I would leave the cards you have open open and use them from time to time and pay them off. Charging and paying timely is what will give you good credit history. As far as you getting a card, just look around and apply for a couple of cards. Try for a major one (by major i mean one that can be used anywhere) and start charging little things and paying them off each month. when I started building my credit, I would charge gas and groceries and make myself put that money aside and pay off the card. If you look at your credit card like using a check (money needs to be in your checking account to pay for whatever you're charging) and then pay the statement balance each month your credit will start to look excellent.

    As far as the bad choices and acquiring debt - if you at least make the minimum monthly payments each month your credit won't suffer. of course, having the debt out there makes what you can afford less, but if you keep paying and never miss payments your credit won't suffer. I was there once due to some out of pocket medical expenses a few years ago. i kept paying, and on tight months just made the minimum balance. My credit score never really suffered. Its the skipped and/or late payments that really hurt you.

    Good luck!!

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  • Ive known a few people that's had to file Bankruptcy. Once they got out & Wanted to start rebuilding there credit they had talked to different banks and they said the best way was to apply for a brand new credit card with a few low limit and what you spend that month make sure you paid it back the same month and within a year it should be perfect.

    Maybe your husband should try that along with the other cards? Im not to good with this credit card.

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  • blank
    Lv 5
    1 decade ago

    I would keep the credit cards but don't use them if you don't have the money. I have two credit cards that I use, but only about once a month. I put a purchase on them that I know I can pay off in full when the bill comes. It has worked well and I have great credit. People before me gave more detailed answers with good ideas, but it seems like you're doing everything else right. Just thought I'd put in my two cents about using the cards. Good luck!

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  • 1 decade ago

    We just bought our house last month and our loan agent was great with giving us tip. we told her we wanted to pay off our credit cards and close them. She said no way, it makes your credit look better it you just pay them off but keep the accts open. As far as cable, phones, utilies, etc.

    These have never showed up on credit for us unless they are deliquent of course.

    My advice is obviously to just keep your credit card limits low. Continue to pay your cars on time (this makes a big deal).

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