HOUSTON - Many people's finances have been devastated by evictions or car repossessions over the last year from losing their jobs.
It might seem like the end of the world, but credit and rental histories can be rebuilt. It just takes time and committment to reducing debt.
A great starting point to repair your credit is to get a credit counselor certified by the National Foundation for Credit Counseling that can help you set a budget and pay down debt.
"Oftentimes, we can work with creditors on a debt managment plan to lower interst rates and payments and get you paid out of debt in three to five years," explained Tara Alderete with Money Management International.
Pull your credit reports from all three bureas, Experion, Equifax and Transunion. You can get them free every week from www.annualcreditreport.com through April 20, 2222. After that, they return to being free once a year.
Correct any errors, make payments on time, and catch up overdue bills.
"This would be past due payments, late payments, accounts that are very close or over their credit line. You want to make a plan to pay those down," said Alderete.
Lower your credit utilization ratio. Divide the total debt you owe by your total amount of credit you have. Say you owe $10,000 on credit cards and have a total of $20,000 in credit. That's a credit utilization of 50%.
"We recommend 30% or lower as the key place you'd like to have it. If you can't maintain it there, you want to shoot for 50% or lower," said Alderete.
A debt consolidation loan can help you reduce your utilization rate and set payments that you can afford. And ask you bank or credit union for lines of credit that can help you rebuild your credit.
"Consider a co-signer or being added to someone else's account as an authorized user if that person has good credit," suggested Alderete.
Also consider using a rent reporting service that reports your rent payments to the credit bureaus. That allows on-time rental payments to help rebuild your credit, but be aware that late payments can hurt it.
"You are going to pay for this service. So there might be an upfront cost. There might be a regular ongoing monthly cost," she said.
The National Foundation for Credit Counseling can help you find a certified credit counselor.
An eviction on your rental history can make renting another home difficult, but not impossible.
Prepare to offer an explanation to a potential landlord. Many people lost jobs last year and landlords know it. Offer evidence that you always paid your rent on-time but lost your job last year. You might even ask your previous landlord for a letter of recommendation.
"Also talk to your previous landlord and see if there's back payment that's due that you can make, or make some kind of an arrangement or an agreement. They may be willing to let you do that and then remove that from your credit or vouch for you as a good tenant," said Alderete.
You can also look to rent from a private owner, rather than a company-owned apartment complex. An owner may give you personal consideration.
You can find a co-signer with good credit that you can share a home with.
And you can offer a larger security deposit or a few months of rent up front.
It may be more expensive to rent again. But establishing a new history of on-time payments can improve your rental history.