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NicholeM12

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I need advice on rebuilding credit - new to this.
I am 22 years old. At 18 I opened my first credit card hoping to build my credit and instead I screwed it up horridly. I lost my job and couldnt make my payments. So I have one collection which is $200, it was $500 but I paid off $300 two months ago. I am going to pay off the final amount this week when I get paid. Other than that one collection I have a few student loans. They are active and not due for payments until next year. Credit Karma claims I have one missed payment on my student loan but like I said before they arent due for payment until 2017. So I am not sure how that is? Is that something that can be removed? I also have one credit inquiry for an auto loan which I did not accept.
I am a full time college student, and a stay at home mother. I do not technically need or want a credit card but I would like advice on the best way to build my credit up. It is a 470! All from that one credit card years ago. Big mistake!! Ive since learned and am very responsible with money. How can I start building my credit up ? My fiance and I would like to buy a house in about 2 years.

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I was exactly where you are not terribly long ago, so I understand the frustration you're feeling. First things first, try to think positive and not get overwhelmed. I know that's easy to say and not so easy to do, but it really is important!

Next, come up with a solid plan for paying your debt off. What you're doing right now is good - paying off what you owe that's already been sent into collections. Once you finish paying off that loan, be sure to contact the agency and have them update the debt as being paid off. That's important to do, because some collections agencies won't automatically remove it from collections, and that could hurt your score if it continues to show as delinquint on your account. The other thing I would suggest is contacting the company that your student loans are through and investigate the missed payment. Find out why it's showing as missed. If it's a mistake, have them correct it, and try to work out a payment arrangement for the rest of what you owe - I know you mentioned they aren't due for payment until 2017, but it's never too early to start if you can. The more you pay now, the less you'll have to pay later.

Next, work on building your credit. With a score in the high 400's, you probably won't get very many offers outside of a Secured credit card. The plus is that you can typically count on a secured credit card to help you build credit. I'd suggest doing a little bit of research on secured cards first, or ask for recommendations. (Credit Karma also will give you recommendations for cards based on what your score is.) While secured cards generally require a deposit or access to your savings or checking account, they can help you get a foot in the door. They'll work well for you as long as you use them responsibly - keep your balance below 20% of the limit and pay your balance on time every month. Once you've established a good history with a secured card, you'll probably get other, better offers.

Last but not least, be patient. I know from personal experience that rebuilding credit is a difficult and tedious process that can't be rushed. Creditors like to see that you can be responsible with your money over time (especially if you've had a bad history with credit in the past), and that can sometimes take a long time, so it's important to be patient. In the long run, it will pay off. I've found Credit Karma to be a valuable resource when it comes to educating myself about how credit works and how to get the most out of the system, but there are also other resources out there that can help you. Try to read up as much as you can about how to rebuild your credit and use what you have responsibly.

I hope this helps! :)

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