Even though you feel that you may have “ruined” your credit in the past, there is one saving grace about credit histories that you can take heart in - most notations, good and bad, cycle off a credit report in seven years. In other words, most bad notations are not permanent. By working to build good new credit and possibly improve some of your old accounts, and depending on other factors like income, debt load, and where you live, you may very well be able to get your ideal credit rating in a shorter time.

One main reason for this is that many lenders tend to look most closely at just the last two years of a person’s credit history when making lending decisions. And since you have that realistic two-year time span in mind, you are already ahead of the game. Of course, every home loan lender has its own criteria, including what are called credit scoring models, so what kind of loan you can get and how you can get it will depend largely on the lender you choose.

The best strategy is open a checking account, savings account, and apply for a secured credit card. Make sure the secured credit card is reported to all three major credit bureaus and is not reported as a secured card. See the PDF Library on this site for a complete breakdown on all secured card programs or visit the Secured Card Survey in the CardRate section. If possible apply for two or three secured credit cards. After a year of timely credit card payments and no-bounced checks you should qualify for reasonably priced unsecured credit cards.

If I consolidate my credit cards into one payment, will this give me a bad credit record?

No. Whether you have one, five or ten open accounts, the number does not matter. What determines your credit is your payment history with your open accounts.

If you transfer all your open accounts to one, the only benefit will be the convenience of converting several bills into one payment, which will make paying bills easier. Creditors don't pay too much attention to the number of accounts you have open; what they do take into consideration is how much total debt that you have in comparison to your income. The creditors will make decisions based on whether or not you have the means available to pay back the money that they lend to you.

Just remember that when you consolidate your credit cards into one account, that does not automatically delete your payment history with these credit cards. Your credit report will have your payment history with those recently closed accounts, which lenders will take into consideration in determining whether or not you will be granted credit.

Establishing good credit ideas

Below are some ideas for establishing credit. If you are successful in establishing an account, and use it responsibly for a year or two, you will begin to build a good credit history.

Apply for the credit cards we offer on this website
The credit cards we offer are proven to build credit and provide it while enjoying a credit line.

Ask local companies for credit
Try your bank, credit union or a local department store. But make sure that the company sends the information on your credit account to one or more credit reporting bureaus so that it will help you establish a credit history.

Find a co-signer
Ask a relative or friend with good credit to co-sign your credit application. A co-signer promises to pay if you don't. If you don't make payments on time, the co-signer will be responsible for the loan. By failing to pay, you could damage your relative's or friend's credit.

Get a secured credit card
A secured credit card is a bank credit card backed by money you deposit in a bank account. If you don't pay off your credit card bill, the money in your account may be used to cover that debt.

Shop around to find a good deal
You can compare current information about secured cards at www.bankrate.com on the Internet. Before you apply, make sure the card issuer will send the information on your credit account to a credit reporting bureau. Look for a secured card with:

• A low annual fee.
• No up-front application, processing or membership fees.
  
• An interest-bearing account for your deposit.