Once you have paid back your outstanding debts you can concentrate on rebuilding your credit rating. Although you can’t do anything about the bad history that you have and the fact that previous debt problems will show on your credit report for 7 ½ years you can start to rebuild your credit and eventually have more positive information on your credit report than negative.
You will do this by applying for small amounts of credit and paying them off on time all the time to start building a good credit record.
You should only start doing this once you have sorted out all your debt problems and are in a financially stable position where you know that you will be able to make all your payments on time.
If there were specific reasons why you got in debt in the first place that haven’t been completely resolved then it would not be wise to get this additional credit until you have that part of your life sorted.
You will only get more credit after you have created an updated budget that will allow for the repayments and show that you will be able to manage the new debt repayments without undue stress.
Lending institutions will look at the positive results you have had with your credit in more recent times and this will make it easier for you to deal with them in the future.
While you will be wary of getting credit cards again, and rightly so, they can be useful for rebuilding your credit. To do this you will get a card that has a relatively low interest rate and a small credit limit and you can use it to buy essential items only. You will need to pay back the full amount at the end of the month so you don’t start building debt again. If you purchase and pay back within the month you won’t be incurring interest charges but you will be building a better credit rating. Later you can make some bigger purchases on essential items once again and then pay them off over a period of time making sure that you always pay the minimum amount required, or better still more than the required monthly payment.
After you have had your credit card operating successfully for some time and paid it off you can apply for personal loans and build your credit by paying them back in full, on time, all the time.
Eventually people will be more interested in your recent good credit history and they will not focus on the problems that you had in the past.