Opening a Checking Account

Maintaining a checking account can give lenders confidence in your financial responsibility and demonstrate your ability to manage your finances effectively.

Opening a Savings Account

Having a savings account listed on your credit application can give lenders a positive impression of your financial management, regardless of the balance in your account.

Open a Charge Account with a Department Store

Accounts like these are often a great starting point for those new to credit, as they can be easier to obtain and help establish a positive credit history.

Try Getting a Loan from a Finance Company

Financial companies can be a great option for those new to credit, as they may be more receptive to your application. While interest rates may be higher than those offered by banks, these companies can often provide a better chance of approval. We recommend speaking with your banker first to explore all available options and determine the best course of action for your individual needs.

Find a Co-Signer

To increase your chances of being approved for a loan, you may want to consider finding a co-signer. One option is to ask your parent to co-sign for you. This can be a good option if your parent has a good credit history and is willing to take on the responsibility of the loan with you. Keep in mind that co-signing is a serious commitment, so make sure that you are able to make the payments on time and in full. By having a co-signer, you can show potential lenders that you have the support of someone with a strong credit history, which can help you qualify for a loan with better terms and interest rates.

Building Your Credit Using Your Current Bills

PBRC, or Pay Rent, Build Credit, Inc., is a platform that connects individuals who lack a traditional credit history with lenders who want to reach them. PBRC specializes in documenting and verifying rental, utility, phone, and other recurring payments that aren’t reported to other credit bureaus. As an FCRA compliant repository, PBRC allows consumers and small business owners to build a credit file and score based on their history of making rent and other recurring bill payments. This credit file and score can then be used to demonstrate creditworthiness when applying for housing, credit, insurance, and employment.


Find Out Your FICO Score

To obtain your FICO score, you first need to obtain a copy of your credit report, which contains the information used to calculate the score. In the United States, there are three major credit reporting agencies: Experian, Equifax, and TransUnion. It’s recommended that you get credit reports from all three agencies, as they may have slightly different information.

All three credit bureaus use credit scores, but the FICO score is specific to Experian and TransUnion. To obtain a free copy of your credit report from each of the three credit bureaus, you can visit Annual Credit Report or (a website owned and operated by Experian), or you can call 1-877-322-8228. You can also send a written request to any of the agencies directly. Note that while the credit report is free, the companies charge $6-8 each to provide your credit (FICO) score.

Evaluate Your Score

Credit scores are measured on a scale ranging from 0 to 999, but the actual scores typically fall between 330 and 850. Here’s what each range of credit scores entails:

  • 330-619: Poor credit. Individuals with a score in this range may be considered high-risk borrowers by lenders.
  • 620-659: Subprime financing may be available to you. This generally means higher interest rates and more strict terms and conditions.
  • 660-720: Prime financing is available to you. You should be able to qualify for loans with better interest rates and terms.
  • 721-750: You may qualify for prime – x% interest rates. This means that you could potentially secure loans with interest rates even lower than the prime rate.
  • 751 and above: Excellent credit. This score can lead to the lowest prime – x% interest rates available depending on the credit product you are utilizing.

Understand What Affects Your Credit

The FICO score calculation is proprietary information that remains a secret. However, we can apply general guidelines to understand how your credit score is affected.

Payment History: About 35% of your credit score may be based on payment history. Late payment or delinquent payment history, including public records like bankruptcy, collection accounts, etc., will negatively impact your credit score.

Amounts Owed: Around 30% of your credit score may be based on amounts owed or outstanding debt. Your credit score can be negatively impacted if you owe close to the credit limit. Having a low balance on two credit cards may be better than having a high balance on one credit card.

Length of Credit History: Approximately 15% of your credit score may be based on the length of your credit history. Your credit score can be positively impacted the longer your accounts have been open, especially if they are with one financial institution.

Taking on More Debt: Approximately 10% of your credit score may be based on how much new debt you incur. Your credit score may be negatively impacted if you have recently applied for several new credit accounts. Promotional inquiries usually do not affect your credit score.

Types of Credit in Use: Around 10% of your credit score may be based on the types of credit you use. Your credit score is usually negatively impacted by loans from finance companies.

Raise Your Score

Raising your overall FICO score takes years of credit experience, but there are some things you can do in the short run to boost it slightly. One of the most important things is to always make your payments on time.

Another important factor is to avoid carrying high balances on credit cards. Ideally, you should never use more than half of your available credit card limit for an extended period of time. This can help keep your credit utilization ratio low, which is a major factor in your credit score.

Fix Bad Credit

Serious credit problems can range from a 30-day late payment to a judgment or bankruptcy. Despite what you may have read on some internet sites, there’s no quick fix to repair bad credit. There are, however, ways to remove inaccurate information and improve your credit over the long run.

If there is inaccurate negative information on your credit report, get it removed. Dispute the charge with the agencies by writing to them or going online to their websites. They have 30 days to respond to your dispute. If they cannot verify the negative information, they have to remove it.

If you have a 30-day late blemish on your credit, you can dispute the negative information as above. If the credit bureaus can’t verify the 30-day late payment with your creditor, the information must be removed.

If you have more serious credit problems such as a judgment, bankruptcy, or foreclosure, it may be in your interest to seek a non-profit credit counselor or an attorney specializing in credit repair. The latter can sometimes settle your debts for less than 35 cents on the dollar and may be able to get some of the information removed. If you simply pay off the judgment, for example, it is still going to stain your credit for a minimum of 10 years. For a foreclosure, the term is 7 years, for a bankruptcy, 10 years; and for tax liens, 5-7. Even after that amount of time goes by, you will need to aggressively go after the agencies to get the information off your credit.


Making the decision to declare bankruptcy is a complex and individualized process that requires careful consideration. It’s important to seek guidance from a reputable credit counselor or bankruptcy attorney who can evaluate the costs and benefits of bankruptcy based on your unique financial situation.

It’s worth noting that not all debtors are eligible for Chapter 7 bankruptcy, as a means test is applied to determine if you’re able to repay a substantial percentage of your debt. In cases where repayment is deemed possible, you may need to consider a Chapter 13 bankruptcy and engage in a repayment plan instead of a liquidation of your debts.

The type of debt you owe and the form of bankruptcy you pursue can also significantly impact your decision to file for bankruptcy protection. You may find it helpful to review the factors that can affect your decision in our associated article, “Filing For Personal Bankruptcy Protection in a U.S. Court.”


Despite the negative connotations often associated with bankruptcy, it is important to understand that filing for bankruptcy can actually provide a fresh start and a path towards financial stability. One encouraging aspect of this process is that your ability to rebuild your credit is better than ever before. After you receive your discharge, you may find yourself inundated with solicitations from lenders offering to finance homes, vehicles, and credit cards. By making responsible financial decisions and using credit wisely, you can take advantage of these opportunities to improve your credit score and build a more secure financial future.

Tips for Successfully Rebuilding Credit Responsibly:

  • Open a checking or savings account to show lenders that you can handle money responsibly.
  • Apply for store and gas credit cards that you would normally pay cash for to start rebuilding your credit.
  • Consider applying for a secured credit card where you deposit cash and charge against it. Make sure to pay advances back over two months so that they will be reflected as positive marks on your credit report.
  • Pay your utility bills and rent on time for at least a year, as this can help build positive credit history.
  • Find a friend or relative to cosign for you on a loan and make sure to pay it on time.
  • Look for car dealers and mortgage brokers that are “bankruptcy friendly” and consider buying a used car to avoid the depreciation that occurs during the first two years of a new car purchase.
  • Stay away from payday loans with high interest rates that can trap you in a cycle of bad credit.
  • Write a letter to each credit reporting agency explaining the circumstances that led to you filing for bankruptcy.
  • Live within your means and avoid unnecessary luxury purchases that increase your debt-to-income ratio. Your consumer debt payments should equal no more than 20% of your expendable income after costs for housing and a vehicle.
  • Pay your reaffirmed, pre-bankruptcy debts on time to show a commitment to financial responsibility.



Fallacy: My Score Determines Whether or Not I Get Credit

Fact: Lenders take several factors into consideration when making credit decisions, including your FICO?,® score. They assess factors such as your income, employment history, and credit history to determine the amount of debt you can manage. Based on their evaluation of this information and their specific underwriting policies, lenders may approve your credit request even if your score is low or decline it despite having a high score.

Fallacy: A Poor Score Will Haunt Me Forever

Fact: Contrary to popular belief, a credit score is not a permanent indicator of your creditworthiness. It represents a “snapshot” of your risk level at a specific moment and can fluctuate over time as new information is added to your bank and credit bureau records. As you make positive changes in your credit behavior, your score gradually improves. Over time, past credit issues have less impact on your score. Lenders typically request your most up-to-date score when you apply for credit. By taking the necessary steps to improve your score, you can increase your chances of qualifying for more favorable interest rates.

Fallacy: Credit Scoring is Unfair to Minorities

Fact: Credit scoring is an objective process that considers only credit-related information. Factors such as gender, race, nationality, and marital status are not taken into account. The Equal Credit Opportunity Act (ECOA) also prohibits lenders from considering this type of information when making credit decisions. Independent research has demonstrated that credit scoring is fair and unbiased towards minorities and individuals with limited credit history. Credit scoring has been shown to be an accurate and consistent measure of repayment for all individuals who have some credit history. Therefore, non-minority and minority applicants are equally likely to pay as agreed at a given score.

Fallacy: Credit Scoring Infringes on My Privacy

Fact: Credit scoring does not infringe on your privacy. Credit scoring evaluates the same information that lenders already look at, which includes your credit report, credit application, and/or bank file. A score is just a numeric summary of that information. In fact, lenders using scoring may ask for less information, such as fewer questions on the application form. So, credit scoring doesn’t expose any additional personal information beyond what lenders already obtain to evaluate creditworthiness.

Fallacy: My Score Will Drop if I Apply for New Credit

Fact: Applying for new credit may cause a slight drop in your credit score, but the impact is usually minimal. When you apply for multiple credit cards in a short period, each inquiry for your credit report information (known as “inquiries”) will show up on your report. While seeking new credit may indicate higher risk, most credit scores are not affected by multiple inquiries from auto or mortgage lenders within a short timeframe. These inquiries are typically treated as a single inquiry and have little impact on your credit score.


As a homeowner who is behind on payments, it can be overwhelming to navigate through the various options available to you. While professionals in the foreclosure business may use terms such as “deed-in-lieu,” “forbearance,” and “loan mod,” it’s important to remember that there are simpler options as well. To help you understand the alternatives to foreclosure, here are a few terms and options that you should consider.


In an effort to delay or diminish your payment, a company may opt to file a hardship package on your behalf. It is not uncommon for lenders to collaborate with “foreclosure assistance” firms before engaging with an individual who is seeking to submit a foreclosure package.


With this option, you can actually sell your house and continue living in. Some investors offer a buy back program where they will step-in quickly, purchase your house, and allow you to rent it while you catch up on your bills and even allow you to purchase it back from them once you are “back on your feet”. (Be very careful, some companies are better then others, and of course, you have those predators out there)

Restructure (Most Popular Alternative)

Some foreclosure companies will negotiate with your lender to get your loan in good standing again. There are many options available to get a restructure approved like a separate payment plan for your delinquency or even adding the delinquency to the end of your loan. No one can guarantee to restructure your payments, so be careful.


Pay your lender(s) your entire past due payments to bring your mortgage current. This option is rarely feasible. (However I know some private money lenders that will provide homeowners up to 90% for the reinstatement amount.)


Hardly available, through traditional lenders, however some foreclosure companies have established relationships with in-house lenders who can give loans on mortgages that are in foreclosure if there is enough equity in your property available.

Sell Your Home

You may simply sell your home before the Foreclosure Sale Date. Sometimes the home owner is unable to sell the home outright at the desired sale price and this is not an option.

Short Sale

In this instance the lender may take less than what you owe on the loan to avoid a lengthy and costly foreclosure process.

Deed-in-lieu of Foreclosure

ou or a foreclosure company can arrange for you to simply give the home back to the lender and walk away with a clean slate.


This is a last resort. This will only save your home temporarily. If you miss one payment during this process the lender will put you right back into foreclosure.