Rebuilding your credit after recovering from addiction

Sound credit is a virtual necessity in today’s world. Recovering from past credit problems can take years, however. This is true whether the root cause was genuine hardship or simply bad decisions. The challenge becomes even greater when you’re putting your life back together after a period of substance addiction. But take heart. While earning a strong credit rating is never easy, you can improve your score by using the game plan outlined in this post.

Step One: Let It Take Time

Good credit is hard to build and even harder to rebuild; we won’t lie. One trap many people fall into is thinking there’s some secret legal method for erasing bad credit overnight. There’s not. Anyone who tells you otherwise is either mistaken or setting you up for trouble. So go into the process knowing it requires patience and diligence. That will put you in the right mindset to enjoy future success.

Step Two: Get a Copy of Your Credit Report

Three agencies handle most credit history requests: Equifax, Experian and Transunion. These companies work hard to keep accurate records. But they make mistakes at times. So begin by requesting copies of your report from each entity and go over it line by line. You may find information that’s inaccurate or out of date. If so, then report your findings to the bureau and request that they delete the erroneous information. You are within your rights to do so, according to the Federal Trade Commission.

Step Three: Save a Few Bucks for a Secured Credit Card

A secured credit card is the time-honored way for people to get on the road to good credit. You provide a cash amount to the issuing bank, usually in the amount of a few hundred bucks. The business then issues a major credit card in your name with a limit matching your deposit. Use the card sparingly and make your payments on time. You should pay your balances in full each month, according to financial experts at Discover. You should avoid using more than 10 percent of your available credit, if at all possible.

Step Four: Apply for an Unsecured Card

After paying on your secured card for a year or so, you can consider applying for an unsecured card. If approved, then follow the same strategy as with the unsecured account. Keep balances low and pay them off each month.

Step Five: Apply for a Furniture Store Account

Many furniture and appliance stores are quicker to grant credit than other financiers, making them a logical next step in the process. But beware of so-called “rent-to-own” businesses. Most of these companies never report to the credit bureaus. Use only a small portion of your credit line at the furniture store and make your payments on time.

Step Six: Check Your Credit Report Again

It’s a good idea to pull a fresh report every 12 months or so. You’ll see your score climb, which is always encouraging. Keep an eye out for inaccurate or obsolete information and always dispute it. Make sure the agency is reporting your good credit references. Contact them right away if you notice problems.

Step Seven: Show You’re Responsible in All Areas of Life

While we say this is step seven, it’s really an ongoing process that begins the day you decide to turn your life around. Having good credit goes hand-in-hand with maintaining a stable work history, keeping out of trouble and honoring your commitments in general. There’s no other way to achieve lasting recovery, whether it’s in regard to your credit rating or any other part of your life. Best of luck in your goals and remember to keep your eyes focused on the future.