How to Rebuild Credit for a Parolee

Getting out of prison and trying to resume a normal life is challenging. You have to organize yourself and your time after living in a structured environment. You have to do all your own shopping, cooking, cleaning and budgeting. But two of the hardest things to do is to find a solid, well-paying job and rebuild your credit.

Instructions

1

Get a copy of your credit report so you can see what accounts you still have open (see Resources). If you have outstanding balances or collections, you will know the amount and contact information for the creditor. Dispute any inconsistencies and try to get them removed.

2

Call creditors to set up repayment terms. As long as you make an agreement with a creditor and pay according to the agreed terms, then creditors cannot take further collection actions against you.

3

Try to renegotiate outstanding amounts if you are able to make a lump sum payment. You may be able to clear a debt away for a fraction of the amount owed.

4

Pay all your bills on time. Even if your credit is bad at the moment, by showing that you are making a good faith effort to start fresh and get on the right path, you will gain respect from future lenders and may be able to buy a home, a car or get an unsecured credit card in as little as one year.

5

Apply for a secured credit card. This card is attached to a savings account and has a credit limit equal to that amount. Be sure that the card issuer regularly reports to the major credit bureaus and has no or low application/annual fees. Ask the creditor if the card can be later converted to an unsecured card if you pay on time.

6

Charge no more than 25-30 percent of your credit limit and try to pay the card off in full each month. This reflects well on your score by showing that you will not get into trouble by maxing yourself out and that you are responsible with your credit.

7

Get a student loan if you are going back to school. Student loans are generally easier to get than other loans and help your credit if they are paid on time.

8

Take advantage of even partial financing for a car on your own, even if it has a high interest rate. You may pay more now in interest, but the benefit to your credit for paying on time will mean lower rates later.

9

Leave old open charge accounts open. The length your accounts that have been open is a part of your credit score. Closing those accounts removes that extra advantage.