Three Tips To Help Re-establish Credit

Perhaps you lost your job and got behind on your credit-card bills, or maybe you just got over-extended and filed bankruptcy. No matter what the situation, you can establish credit again. When you bring your accounts current or the bankruptcy is complete, you can start rehabilitating your credit score. Here are three tips to help get you going:

Consider insuring your credit. Credit is necessary when you need to buy a car. No matter how bad your credit is, automobile dealerships can arrange financing by selling you repossession insurance. It works just like any other vehicle purchase: You make a down payment and agree to make payments on the balance of the purchase price. In addition, you pay premiums to an insurance company that will cover the lender's loss if d the car is repossessed. Repossession insurance is expensive, but it is one sure way to vehicle loan and re-establish credit.

Apply for an overdraft line of credit on your checking account. A little-known credit repair tip is to start with your own bank. Most consumer banks will provide a line of credit for your checking account. It is often called overdraft protection because it is designed to cover bounced checks.

What you do is write a check for more than the amount in your account. Say your overdraft protection limit is $300. You have $25 in your checking account, so you write a check for $50. When the check is presented to the bank for collection, the credits your checking account with $100. Because you have overdraft protection, the check is not returned for insufficient funds, and you won’t be penalized. After the check is paid, you have a balance of $75 in your account. The bank bills you monthly for the $75. You can repay the money all at once, or make minimum payments every month. If you make monthly payments, the bank will charge interest and a service fee. Banks often report this activity to credit bureaus.

Join a health club. You can get in shape and re-establish credit! Clubs that require annual membership fees do arrange financing. The club is probably working with a bank or finance company, so find out who is extending the credit and whether they report payment activity.