Hi krautland-ga -
It would seem that you have excellent prospects for improving your
credit score as you are no longer in debt. But the ironic thing about
high credit scores is that you have to pay off debt to get them. Also,
you should pay off this debt quickly and regularly.
You are essentially starting over; the same applies to you as applies
to someone starting out fresh. You have to (re)establish a good
Below are recommended steps to attain a good credit rating compiled by
American Express with the assistance of the Federal Trade Commission:
"FIRST, consider applying for a credit card issued by a local store
and use it responsibly. Ask if they report to a credit bureau. If they
do ? and if you pay your bills on time ? you?ll establish a good
"SECOND, consider a secured credit card. It requires that you open and
maintain a bank account or other asset account at a financial
institution as security for your line of credit. Your credit line will
be a percentage of your deposit, typically from 50 to 100 percent.
Application and processing fees are not uncommon for secured credit
cards. In addition, secured credit cards usually carry higher interest
rates than traditional nonsecured cards.
"THIRD, consider asking someone with an established credit history --
perhaps a relative -- to co-sign the account if you don't qualify for
credit on your own. The co-signer promises to pay your debts if you
don't. You'll want to repay any debt promptly so you can build a
credit history and apply for credit in the future on your own."
The FIRST item is quite easy in New York City. A department store
like Macy's will often ask if you want the store's credit card when
you pay for a purchase. Just say yes, and they will invariably give
you one. Use it and pay it off at the end of the month. Use it the
next month and pay it off promptly. Etcetera, etcetera.
The SECOND item, a secured card, is also a good choice. You will use
your $2300 savings as collateral against a credit card balance. You
don't have to use the bank savings to pay off the card, just make
regular payments as usual. And be sure to pay it off every month.
Also, be aware of scams associated with the marketing of secured cards:
Secured Credit Card Marketing Scams
The THIRD item is self-explanatory.
Have you checked that your credit report is correct in every way? If
you dispute some of the conclusions you have the right to correct
"How To Dispute Errors on Your Credit Report
"1. Make a copy of your credit report and circle every item you
believe is incorrect.
"2. Write a letter to the reporting agency (the address will be
printed on the report). Explain each dispute and request an
investigation to resolve the issues. If you have supporting paperwork,
send it along, coding pages to match dispute paragraphs. Do not send
"3. Send all materials by certified mail, return receipt requested,
so that you can prove the packet was received.
"4. Send a similar letter of dispute to the creditor whose
reporting statements you disagree with."
How to Correct Errors on a Credit Report
I'm not going to recommend what choices you should make among the
three recommended above by American Express with the FTC. I will say
that the store card seems an easy, logical choice. Also here are two
web sites that issue or rate secured cards:
The 10 Best Credit Cards for Consumers (Secured)
As you can see by the bankrate.com website, both finance charges and
annual fees may be quite high with secured cards. As you should be
paying off your entire bill each month, the finance charges will not
affect you. Perhaps at the end of one year, you can qualify for an
unsecured card and will not have to pay a high annual fee again.
Finally here are some highlights from the website below on improving
your credit score:
1. Pay bills on time
2. Don't close out old credit cards even if you don't use them (this
may not apply in your case)
3. Don't open a lot of new accounts.
How to Improve your FICO Score
You mentioned that you'd like to raise your score within the next 6
months to a year. It may take longer than that. And don't forget, a
Macy's or Lord&Taylor or Saks or Barnes and Noble or Best Buy or
whatever card will go a long way to helping you raise your score.
Just get one and pay it off every month.
If you decide you want to go the credit card route, you might want to
check first with the bank in which you have your savings account.
Here are some more sites that may be of interest to you:
Secured Credit vs Unsecured Credit
10 questions before getting a secured credit card
Credit Cards for People with Bad Credit
Google Search Strategy
Search Terms: secured credit card
Search terms: secured credit card site:.gov
Search terms: improving credit score
Here's to an improved credit score,