How Can I Rebuild My Credit Score If I Have Bad Credit?

[Benzoate]

If you have bad credit...

...I put myself in an unwanted situation where I unknowingly withdrew more money than I have in my bank account, thus crossing over my credit line. How can I establish a good credit score again or at least reach a point where I have no bad credit score? Wouldn't a bad credit score prevent you from borrowing loans from a bank?

 

[edward]

...I put myself in an unwanted situation where I unknowingly withdrew more money than I have in my bank account, thus crossing over my credit line. How can I establish a good credit score again or at least reach a point where I have no bad credit score? Wouldn't a bad credit score prevent you from borrowing loans from a bank?

What kind of account was it?? Regular checking accounts and credit lines are two different things.

 

[Benzoate]

What kind of account was it?? Regular checking accounts and credit lines are two different things.

I have a checking account and a credit line account. When I know longer have money in my checking account, I would withdraw money from my credit line account. The credit line account was put their to prevent unnecessary overdraft fees. I borrow to much money and exhausted all the money within my credit line account, because I thought all the money I was withdrawing was my money.

 

[edward]

I have a checking account and a credit line account. When I know longer have money in my checking account, I would withdraw money from my credit line account. The credit line account was put their to prevent unnecessary overdraft fees. I borrow to much money and exhausted all the money within my credit line account, because I thought all the money I was withdrawing was my money.

It all depends on your relationship with the bank. If you repay the money immediately there may be no effect on your credit score.

My son was lucky when he overdrew on his credit reserve, the bank upped his credit limit.

By all means go to the bank and talk to them. Banks are currently tightening credit, but on the other hand they don't want to lose customers.

And don't be shy about asking to speak to a manager.

 

[glondor]

I believe your credit will be effected only if you do not make the necessary payments as per your overdraft agreement with your bank.

 

[Benzoate]

It all depends on your relationship with the bank. If you repay the money immediately there may be no effect on your credit score.

My son was lucky when he overdrew on his credit reserve, the bank upped his credit limit.

By all means go to the bank and talk to them. Banks are currently tightening credit, but on the other hand they don't want to lose customers.

And don't be shy about asking to speak to a manager.

I have spoken to the manager of my bank and he said he wouldn't close my account as long as I kept making payments to the bank. I wasn't able to get a job this summer, (this catrosphe happened all in the summer) so I was unable to make payments to the bank. As the summer days past and I was unable to find a job, the bank closed my account. Luckily for me, my parents helped me out and we talked with the manager of the bank and I was able to established a new account with the same bank, only my account was now a joint account with one of my parents. I am now back in school , and I have both of my after school jobs back and now making weekly payments to my credit line account. Even though my parents paid for my overdraft fees, I still had to pay back the money I owed to my credit line account. With all that said, will making weekly payments towards my credit line help erode my bad credit score?

 

[brewnog]

Do you still owe money? If so, you'll definitely have to keep up repayments in order to repair your score. If you're responsible enough, using a credit card (if you can get one!) can help build up good credit history providing you pay off the balance in a timely manner; just making a few small purchases each month (and paying off the balance in full monthly) can help.

 

[WhoWee]

Please note...if the bank closes your account...make payment arrangements and bring your balance to zero.

Otherwise, you'll find out about ChexSystems the hard way. ChexSystems can prevent you from opening an account of any type...anywhere in the banking system...not good.

So make sure you deal with the problem asap.

 

[edward]

I have spoken to the manager of my bank and he said he wouldn't close my account as long as I kept making payments to the bank. I wasn't able to get a job this summer, (this catrosphe happened all in the summer) so I was unable to make payments to the bank. As the summer days past and I was unable to find a job, the bank closed my account. Luckily for me, my parents helped me out and we talked with the manager of the bank and I was able to established a new account with the same bank, only my account was now a joint account with one of my parents. I am now back in school , and I have both of my after school jobs back and now making weekly payments to my credit line account. Even though my parents paid for my overdraft fees, I still had to pay back the money I owed to my credit line account. With all that said, will making weekly payments towards my credit line help erode my bad credit score?

Have you checked to see what your credit score is? You can get one free credit report per year. Most younger people don't have a very high FICA score anyway. It is great that you had your parents to help you out.

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre34.shtm

 

[Chi Meson]

Do not worry! "Bad Credit Rating," that which prevents you from getting a car or house, requires more than a few months of a bank overdraft.

Personal story: third year in college, I bounced about 25 checks right in a row. This was before ATMs were everywhere, and before everyone had credit cards, so everything was paid for by check, so 25 checks was only 2 weeks of normal spending.

Thing is, when a check bounced, the bank charged a $15 fee per bounce, so that affected your balance, and in one day $100 evaporates and you don't even know it yet. So after another deposit, you think you have cash available, but it sank right into the deficit hole, and you write more checks, thinking they're good, and then they bounce. Anyway, my credit was *****d.

About 6 years after that, when I went to get my first car, I had the highest possible rating. The trick is to have one and only one credit card, and never miss a payment, and try to pay the full balance with each statement. So, bank overdrafts are small deals. Credit worthiness comes from proving that you can pay back your debt.

 

[edward]

Not all banks use checksSystems, especially local credit unions.

Here are some links that may be helpful:

http://www.creditinfocenter.com/FeaturedArticles/ChexSystems.shtml

http://www.chexsystemsvictims.com/AboutmyList.html

 

[TheStatutoryApe]

The trick is to have one and only one credit card, and never miss a payment, and try to pay the full balance with each statement.

Could be wrong but I have heard that it is better to pay over two or more payments. This apparently shows that you are financially responsible over time where as paying it all off each month shows little more responsibility than paying it up front instead of on credit. So the idea then is to make a big purchase that you have the money for (such as a laptop or new tires for the car), keep the money in the bank and charge it, then pay the bill off over a few payments with the money you set aside.

Another thing you can do, if you can afford it, is have bills in general and pay them on time. Car insurance and cellphone bills are good standard bills. I paid a two hundred dollar deposit (due to bad credit) for my cell about two years ago and now I have unlimited credit on my account.

 

[WhoWee]

To build good credit...

1.) make sure you don't overextend

2.) open a credit card, a store account (or 2), eventually a car loan

3.) PAY ON TIME

 

[Chi Meson]

Could be wrong but I have heard that it is better to pay over two or more payments. This apparently shows that you are financially responsible over time where as paying it all off each month shows little more responsibility than paying it up front instead of on credit. So the idea then is to make a big purchase that you have the money for (such as a laptop or new tires for the car), keep the money in the bank and charge it, then pay the bill off over a few payments with the money you set aside.

That would be so, perhaps, for the occasional large purchase. But these days, the credit card is used to pay regular bills, gasoline purchases, and now it's used to pay for groceries and the like. We use one credit card for buying everything, so we need to pay it off each month. When we buy something big (furniture for example) then it does take a couple of months to pay it down completely, but in general, it's paid in full.

Our rating is near-perfect. 788

 

[Evo]

Utilities, like phone, gas, electric, etc... don't report to credit bureaus unless your account is closed, it is written off and sent to a collection agency. Then it is the collection agency that reports it, not the utility. While a good payment history with the utility is good with that utility, it has no bearing with any other utility or with establishing credit as far as a credit report goes.

 

[WhoWee]

Just be careful with your balances and even if you can't pay the full amount...pay on time.

 

[TheStatutoryApe]

Utilities, like phone, gas, electric, etc... don't report to credit bureaus unless your account is closed, it is written off and sent to a collection agency. Then it is the collection agency that reports it, not the utility. While a good payment history with the utility is good with that utility, it has no bearing with any other utility or with establishing credit as far as a credit report goes.

Does that include cell phones?

 

[WhoWee]

Be careful with utilities...don't get too far behind...if you get turned off...additional deposits and re-connect fees may be required.

 

[Evo]

Does that include cell phones?

Cell phones are a bit different as some companies will take into consideration your payment history with another cell phone company if you send them copies of the last several months with the other company showing that every bill was paid on time. You can usually request that they take this into consideration, they don't have to though. If you have bad credit or no credit, they may still want a deposit or put you on a limited spending account. Of course this is true of actual cell phone companies, there are only a few that actually own networks, if it's some reseller, and there are thousands of those, no telling what they might do.

The up side is that if you are late in paying a real utility company, it won't appear on your credit report unless you are turned over to a collection agency.

 

[JasonRox]

Cell phones are a bit different as some companies will take into consideration your payment history with another cell phone company if you send them copies of the last several months with the other company showing that every bill was paid on time. You can usually request that they take this into consideration, they don't have to though. If you have bad credit or no credit, they may still want a deposit or put you on a limited spending account. Of course this is true of actual cell phone companies, there are only a few that actually own networks, if it's some reseller, and there are thousands of those, no telling what they might do.

The up side is that if you are late in paying a real utility company, it won't appear on your credit report unless you are turned over to a collection agency.

I remember getting an $800 cellphone bill. That was hard to swallow.

 

[Evo]

I remember getting an $800 cellphone bill. That was hard to swallow.

Ouch, what happened?

 

[TheStatutoryApe]

I remember getting an $800 cellphone bill. That was hard to swallow.

That happened to my ex. She was told by a representative that her fre nights and weekends covered calls to Canada but failed to mention some technicality which made it the case only some of the time depending on the situation. Don't remember the details. And once she accidentally turned on the internet function on her phone before going to bed and left it connected all night resulting in an enormous charge.

 

[WhoWee]

Evo...

A story for you.

Yesterday, my neighbor visited my wife (very upset) and wanted to know if she saw the electric company truck parked outside?

My wife said "no, why"...the neighbor explained the electric company turned off their power...and they couldn't cook...etc. I'm out of town, but they ate and relaxed until bedtime at my house.

It seems their bills ran $350+ per month through the summer (I thought I was the only one) and their balance was around $500...only made a partial payment last month.

They received a late notice (and late fee) but NO DISCONNECT NOTICE. When the electric company showed up...the neighbors father (lives with them 80 years old, diabetic and other issues requiring medical treatment) answered the door and was told to pay or a disconnect would result. The father (again 80 and confused I should add) didn't know where my neighbor's check book was stored. Then, he realized he hadn't deposited his pension check yet into his own account and further didn't realize he could still write a check and go to the bank and make a deposit. Instead, he said the family would be home soon...could they come back?

The electric company chose to turn the power off on the old man, and left.

The paid the bill (along with a security deposit) this morning and the power was restored this afternoon.

I told them to call the PUCO.

 

[Evo]

Evo...

A story for you.

Yesterday, my neighbor visited my wife (very upset) and wanted to know if she saw the electric company truck parked outside?

My wife said "no, why"...the neighbor explained the electric company turned off their power...and they couldn't cook...etc. I'm out of town, but they ate and relaxed until bedtime at my house.

It seems their bills ran $350+ per month through the summer (I thought I was the only one) and their balance was around $500...only made a partial payment last month.

They received a late notice (and late fee) but NO DISCONNECT NOTICE. When the electric company showed up...the neighbors father (lives with them 80 years old, diabetic and other issues requiring medical treatment) answered the door and was told to pay or a disconnect would result. The father (again 80 and confused I should add) didn't know where my neighbor's check book was stored. Then, he realized he hadn't deposited his pension check yet into his own account and further didn't realize he could still write a check and go to the bank and make a deposit. Instead, he said the family would be home soon...could they come back?

The electric company chose to turn the power off on the old man, and left.

The paid the bill (along with a security deposit) this morning and the power was restored this afternoon.

I told them to call the PUCO.

The late notice would contain verbiage about the possibility of a service interruption, that would mean that a service man would go to the premise, request payment, and if no one was home, or no one paid, the service would be interrupted, the account would then be given a number of days to make payment or suitable payment arrangements before the account was disconnected. Turning off (interrupting) service and account disconnection are two different things. If they got a late notice, if they read it carefully, I''ll bet anything it mentions something to the effect that payment of the bill will avoid interruption. I don't get what your point is. It sounds like the electric company followed routine procedure.

 

[WhoWee]

I'm out of town, haven't seen the statement.

I understand the differences...and I'm not sure what went on with the deposit?

I guess my point is the human side of the story. The old man standing at the door confused (and very frail...can barely stand let alone walk...he even has in-home nursing care 3 or 4 times per week).

Yes, my neighbor should have paid the full amount last month...that is his fault clearly. My guess is he waited a few days because we were all without power a week or so ago after IKE blew through the area.

Likewise, the electric company rep could have taken a closer look at the situation...or asked more questions? The house offers ample evidence that a family does actually live there (toys, swingsets, LOTS of kid stuff), the old man was confused and IS VERY SICK - he has REAL medical issues and shouldn't have his power turned off...just a bad situation in general.

I thought the story might be of interest to you...nothing more.

 

[Evo]

I'm out of town, haven't seen the statement.

I understand the differences...and I'm not sure what went on with the deposit?

I guess my point is the human side of the story. The old man standing at the door confused (and very frail...can barely stand let alone walk...he even has in-home nursing care 3 or 4 times per week).

Yes, my neighbor should have paid the full amount last month...that is his fault clearly. My guess is he waited a few days because we were all without power a week or so ago after IKE blew through the area.

Likewise, the electric company rep could have taken a closer look at the situation...or asked more questions? The house offers ample evidence that a family does actually live there (toys, swingsets, LOTS of kid stuff), the old man was confused and IS VERY SICK - he has REAL medical issues and shouldn't have his power turned off...just a bad situation in general.

I thought the story might be of interest to you...nothing more.

Regulated utility companies have very little heart. The deposit is unusual in this circumstance, but not unprecedented and perhaps can be fought. But if it is an approved policy, fighting it may be of no use.

There are several things your neighbor can try if they are poor. Some electric companies will allow yearly averaging, so that the person pays a fixed amount every month, so there are no surprises. Also, they should ask the electric company about charities they work with that help poor people pay their electric bills.

Unless a person is on some type of support system dependent on electricity, just being ill will not get the account flagged to avoid interruption.

The techs that go into the field aren't authorized to make payment arrangements or decisions, they are there to work a ticket.

I don't understand the power companies fear in this matter, if it is a long time homeowner, do they think they are going to run off in the middle of the night? Well, maybe now there is more risk of that I guess, but it's not like the power company will have that many homeowners running off that they will go broke.

Usually accounts have credit scores that determine treatment on paying. A person with a good payment history isn't going to get turned off for being late one month. A new customer or a customer with a bad history doesn't get as much time to pay.

 

[WhoWee]

Unforunately (?) they both work and the old fellow has a pension...they can pay their bills.

I am going to check when I get back regarding medical conditions. The grandfather is sick enough to require in-home medical treatments by skilled nurses...he really shouldn't be without power.

 

[Evo]

Unforunately (?) they both work and the old fellow has a pension...they can pay their bills.

It's not their ability to pay, but how they pay that determines how they are treated.

I am going to check when I get back regarding medical conditions. The grandfather is sick enough to require in-home medical treatments by skilled nurses...he really shouldn't be without power.

My mother is in her 80's, has diabetes, and a serious heart condition, but she is not on life support, respirator, etc... If he isn't dependent on medical equipment to stay alive, cutting off the electricity is not going to put him in a life threatening position.

 

[TheStatutoryApe]

It seems their bills ran $350+ per month through the summer (I thought I was the only one) and their balance was around $500...only made a partial payment last month.

That's crazy! My bill is only about $30 a month!