If you need to start rebuilding credit, but your card accounts are closed, there's no quick solution on hand. Still, you can obtain nominal accounts that will help prove you can manage credit in the future:
¢ One of the best ways to start successfully rebuilding credit is with the judicious use of a low-limit or secured credit card. A local lender, such as a credit union, might be willing to offer you a credit card with a low limit to get you back in the game. Try to keep your balance on the card at 50 percent or less of the maximum to get the best credit-scoring boost.
¢ If you can't find an agreeable lender, consider a "secured" account - you are securing your line of credit with your own money to minimize the risk the lender is taking when it issues you a credit card. The good news is that a secured card is reported by the credit bureaus as a revolving account the same way as any other credit card. So if you maintain a good relationship with the issuer, you will see favorable results on your credit report in a fairly short time. New accounts with solid on-time payments for a few months will greatly improve your report.
¢ Another good tool for spiffing up your credit is a passbook loan. Once again, you have to have the savings to cover it, but these accounts are reported and paid as installment loans. This is important because another one of the factors in credit scoring is different types of credit. Again, on-time payments are crucial. If you get the loan through your local bank or credit union, check to make sure they report accounts to the three major credit bureaus.
¢ One more area you can explore is retail-store credit cards. These accounts are generally easy to acquire and carry low limits. Use these cards only when you have the money set aside to pay for what you are buying. Paying your monthly balance in full is best, but if you carry a balance at all, be sure to keep it below 50 percent of available credit.
Remember, over time, bad credit will drop off your credit report, to be replaced with the good.