Off the Cuff / My Other Journal

Credit Repair

My son asked for credit repair advice for a friend of his (Ricky) who got into serious debt and lost all credit due to a shop-a-holic ex-wife. I am putting here the essential points inside the e-mail I sent to Ricky with the hope that it may be of help to someone else.


For credit repair you need to first determine whether the credit report pertaining to you is completely correct. Studies show nearly eighty credit reports contain some kind of error that leads to wrong credit scores.

What to do:

For immediate purchases, buy only what you absolutely need and try to pay in cash, at least until all debts are paid.

Start reducing the number of credit cards. The accounts that are old and no longer in use should be closed.

After closing the unnecessary accounts, the new account status needs to be reported to the credit reporting agencies.

Reduce the credit limits on your existing accounts.

Settle all outstanding accounts and debts.

With the objective of reestablishing credit, ask a friend or relative to co-sign for a small loan. Make timely payments on this loan.

Get one credit card and make all payments on it on time.

After this, whatever you do, do not get into credit debt that you cannot pay, ever. In time, your credit will be repaired and it will rise above average credit.