University of Illinois Extension

Build a New Credit Record

Manage Your Money

To reestablish your credit you need to build a good credit report. This means you must take a close look at how you manage your money. Take time to write a spending plan for yourself. Compare your income with your expenses. Make sure that you pay your bills by the due dates. Talk to current lenders about working out a plan that will make it easier to pay your debts. The National Foundation for Credit Counseling (800-388-2227) or can help with these tasks. Another resource for counseling is .

To build a good credit report, lenders must report positive information about you to the credit reporting agencies. Check that payments you're making on time (such as rent, loan, or utility payments) are reported to one or more of the three credit reporting agencies.

Use Secured Credit Cards

Another way to show that you're creditworthy is to responsibly use a secured credit card. A secured credit card looks like and can be used just like a regular credit card. To get a secured credit card you must deposit money into a savings account as collateral. Generally, the credit limit on the secured credit card will be 50 percent to 100 percent of the money you deposit. You should earn interest on the money deposited. A secured credit card may have an application fee as well as an annual fee. You'll pay interest on unpaid balances. Know the fees and interest rate charges before you apply for a secured credit card.

To apply for a secured credit card, check with your local bank or credit union. Check Card Web (1-800-874-8999). It has a list of banks offering secured credit cards. You'll pay a small fee for this list. When you get a secured credit card, be sure the bank or credit union reports your use of the card to the credit reporting agencies. A secured credit card may be convenient, but remember that the main reason you have the card is to reestablish your credit by proving you can pay your credit bills on time.


What I need to Do By When

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