Managing Debt For Dummies
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If your credit history is poor, you can rebuild it over time so that when you apply for credit, creditors who evaluate your application see an improved credit history and a higher credit score.

Before you begin the credit rebuilding process, you need to get some preliminaries out of the way. These steps help you ensure that the credit-rebuilding process goes smoothly.

  • Order a copy of your credit history from each of the three national credit-reporting agencies. Review each record for errors, and correct any inaccuracies you find. Watch out for

    • Accounts that don’t belong to you.

    • Incorrect information about your accounts. For example, your credit report wrongly indicates that you defaulted on a loan or that you paid your MasterCard late.

    • Information about some of your accounts is incomplete. For example, your credit report does not show that you paid off a loan, got a federal tax lien released, or completed your Chapter 13 bankruptcy.

    • Negative account information that is too old to be reported still shows up.

    • Some of your identifying information (like your Social Security number, name, or address) is wrong. These kinds of errors can cause your credit information to be confused with someone else’s. As a result, that other person’s information could end up in your report.

      After you correct an error in your credit history, order another copy of that record a month or two later to make sure the erroneous information has not returned. Sometimes, credit reporting agencies mistakenly reinsert erroneous information after that information has been corrected.

  • Find out your FICO score. This is the credit score most creditors use to get a quick measure of how your credit compares to other debtors. It’s derived from your credit record information. Generally, the higher your credit score, the more attractive you are to creditors; the lower your score, the harder it is to get credit, and the more the credit you get will cost you. A score between 650 and 700 is good; a score above 700 is stellar. Go to myFICO to get your score.

  • Start saving. It may be impossible to rebuild without having money in savings. For credit rebuilding purposes, you should have at least $1,000 in a savings account. However, don’t stop there. You also need money in savings so you can pay for unexpected expenses with cash rather than with a credit card. Ideally, you should have at least six months worth of living expenses in savings.

About This Article

This article is from the book:

About the book authors:

John Ventura: John is a best-selling author and a nationally boardcertified bankruptcy attorney. He is also an adjunct professor at the University of Houston Law School and the director of the Texas Consumer Complaint Center at the Law School.
As a young boy, John dreamed of becoming a Catholic priest so he could help everyday people, and he spent his high school years in a Catholic seminary. After graduating, however, John decided to achieve his dream by combining journalism with the law. Therefore, he earned an undergraduate degree in journalism and a law degree from the University of Houston Law School. Later, he and a partner established a law firm in Texas, building it into one of the most successful consumer bankruptcy firms in the state. He subsequently began a successful consumer law firm in South Texas.
Today, as Director of the Texas Consumer Complaint Center, he supervises law students as they help consumers with their legal problems. He is also a regular speaker at law conferences around the country and serves on the Bankruptcy Council for the Texas Bar Association.
John is the author of 13 books on consumer and small business legal matters, including Law For Dummies, 2nd edition; The Everyday Law Kit For Dummies; Divorce For Dummies, 2nd edition; and Good Advice for a Bad Economy (Berkeley Books). John has been interviewed about consumer money matters by numerous national media including CNN, NBC, NPR, Bloomberg Television & Radio, The Wall Street Journal, USA Today, Newsweek, Kiplinger’s Personal Finance, Money, Inc. Martha Stewart’s Living, Bottomline, Entrepreneur, Bankrate.com, CBSMarketWatch.com, and MSNMoney.com. In addition, his comments and advice have appeared in major newspapers around the country, and he has been a frequent guest on local radio programs.

Mary Reed: Mary Reed is a personal finance writer who has coauthored or ghostwritten numerous books on topics related to consumer money matters and legal rights. The books she has coauthored with John Ventura include The Everyday Law Kit for Dummies, Divorce For Dummies, and Good Advice for a Bad Economy (Berkeley Books). Mary has also written for the magazines Good Housekeeping, Home Office Computing, and Small Business Computing, and she has ghostwritten numerous articles that have appeared in national and local publications.
Mary is also the owner of Mary Reed Public Relations (MR•PR), an Austin, Texas-based firm that provides public relations services to a wide variety of clients, including authors, publishers, attorneys, financial planners, healthcare professionals, retailers, hotels, restaurants, and nonprofits.
Prior to starting her public relations business and writing career 20 years ago, she was vice president of marketing for a national market research firm, marketing director for a women’s healthcare organization, and public relations manager for Texas Monthly, a national award-winning magazine. She received her MBA from Boston University and her BA from Trinity University in Washington, DC.
In her free time, Mary serves on the board of a community development corporation in her neighborhood. She also enjoys long morning bike rides, road trips with her husband, gardening, working her way through the stack of books by her bed, taking care of her six cats, and spending time with her family and many friends.

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