Tips on Reestablishing Credit

Develop a money management plan or budget. Your plan should include savings, housing, food, clothing, medical, insurance, auto and transportation, childcare costs, entertainment and other expenses. Planning guides and budget worksheets may be obtained from Momentive™ Consumer Credit Counseling Service®, libraries, and bookstores.

• Buy reasonably priced items of real need with payments that fit easily into your budget.

• Pay as promised, on or before the due date.

• Put some money away each month. Establish a savings account. Creditors consider this evidence that you can handle money. Use it, if necessary, as security to borrow against.

• Establish a personal contact with the branch manager or loan officer of the bank or credit union where you maintain your accounts.

• Contact creditors whose accounts you have paid off earlier. They may consider reopening a line of credit. Points they may consider are how regular your payments were before problems arose and how long it took to resolve your problems.

• Do not make several applications for credit within a short time. Creditors sometimes look upon this unfavorably. Apply to one creditor and allow your repayment record to establish itself before applying elsewhere.

• Accept offers for pre-approved credit cards, but be aware of high interest rates.

• Accept offers from dealers who sell and finance their own merchandise. Take advantage of 90 days same as cash.

• If you must borrow money, offer security such as a car, savings account or other valuable property.

• If necessary, ask a relative or friend who has good credit standing to co-sign a loan application and share your liability.

• Avoid so-called "credit repair clinics" which charge high fees for doing what you can do yourself. Momentive™ can provide information on the procedure to follow.

IF CREDIT IS DENIED

• Ask the creditor to furnish, in writing, the reason credit was denied.

• Check with the credit-reporting agency listed as the source of the adverse report to determine if the information reported is accurate. If the report is in error, you can have the incorrect information removed.

• Do not apply for credit elsewhere until the reason for the denial has been resolved.

• Keep in mind that the creditor is also looking at other factors such as length of time on the job, length of time at one address, and the percentage of income owed out of "take home" pay excluding housing cost. For most people, this should not exceed 20% excluding mortgage and car payments.

Back to Establishing Credit