Crummy credit? Let’s fix it!

April 30, 2010

Here at Car Country, we are used to people with bad credit. That’s what we do! Our job is to get you into a clean, reliable vehicle with low monthly payments, even if you’re credit history isn’t the best. So you’re purchasing a car from us, and you love us, but you want to get to work on rebuilding your credit. Let us tell you how.

The first step is to get a copy of your credit report from all three credit agencies: Equifax, TransUnion and Experian. You can get a free report from places like www.freecreditreport.com (tell your friends, tell your dad, tell your mom!). It may not seem free because you have to give them your credit card information, and they charge you a small fee (around $14.95) but if you call immediately and cancel their “service,” you will get the fee refunded in a week or so. So it really is free, it just may not seem like it right then.

Next, look over all of the report carefully. Almost everyone will have a mistake on their report, so read slowly! It is also interesting to see what’s on your report; you may have a strike against you that you don’t even know about. (This is a real deal; it happened to me.) You can send a letter to the company that is saying you didn’t pay them if you feel it’s in error, or it was an honest mistake, and explain the situation; this helps you look like a good person and they’ll be more willing to work with you to remedy the situation.

So you’ve made some mistakes, and you are now looking at a list of them in black and white. Seems overwhelming, and you’re kicking yourself now for paying bills late, or whatever you did to mess up your credit. (Note: late payments can stay on your credit report for seven years, bankruptcies for 10). Not to worry, it’s never too late. Sadly, only time can fix the situation, but that’s okay. Time is one thing that everyone has, so let’s get going on fixing your credit!

Pay your bills on time! This is the number one way to fix your credit. Improve your habits, and your credit score will slowly go up. Find a system that works for you, and stick with it. At our house, we use a dry erase board, listing each bill, the amount, and the day that it’s due. Once it’s paid, we check it off the list. We do this every month, and we can easily see what’s been paid and what hasn’t.

If you have 20 different credit cards, it’s time to quit that! There is nobody in the world that needs that many cards; the recommended number is two to four. A dangerous habit is opening multiple cards for stores. You know how you go to say, Target, and they offer you a 10% discount if you open a Target card? That’s how they suck you in. Because what they don’t tell you is that while you’ll save your 10% (big deal), you must put that purchase on your Target card. One way around this is to open the card, charge it, and then make an immediate in-store payment. But honestly, it’s never a good idea to open all those accounts. There was a time when I had J. Crew, Old Navy, Express, Target, Lowe’s…and three out of five of those were used maybe two times. In the meantime, I made a late payment here and there, and what did I have? Strikes on my credit, all for a stupid pair of Old Navy flip-flops. So next time they ask you if you would like to save 10%, just say, “No, thanks!”

Immediately close all of the accounts that you don’t use. Cutting up a card is a good start, but that doesn’t mean you’ve closed the account. Make sure you contact the company and close it (your credit report will then read “Closed by Consumer,” which is what you want it to say.) If you have a large number of cards, close them out slowly over the period of several months, not all at once. Start making your payments (ON TIME!). Your goal is to pay off the card with the highest amount of interest first. Put any extra cash that you can toward that bill, and pay the minimum on the others. Once you pay that off, use the money you were using toward that bill and pay it toward the next highest-interest card, and so on. Eventually you’ll pay them off, and your credit will start to repair itself. One last thing is to open a savings account at your bank. This shows creditors that you’re serious about saving and that you have money to pay your debts, if necessary.

Hang in there, and you will eventually get your credit back in good standing. But in the meantime, if you need a car, come see us at any of our three Car Country locations, and we will be happy to help you out!

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