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Credit Repair & Establishing a Credit History Under Age 21

Posted on February 26, 2011

Many young people get bad credit right out the gate because they haven’t learned the fundamentals of credit repair before when they get their first credit card. Unfortunately, it can be harder for someone under age 21 to repair their credit because of recent changes in the credit card law.

Trouble Getting New Credit Under Age 21

One of the keys to credit repair is rebuilding your credit score by making timely payments on a credit card account that’s in good standing. For young adults under age 21, this can be difficult.

Recent chances to the credit card law requires credit card issuers to verify income of young adults before giving them a credit card. If you don’t have any income, or at least enough income, to qualify for the credit card, then you’d have to get a co-signer to open a new credit card account. It may be hard to convince someone to cosign your credit card application, especially if you have a history of not making your credit card payments and you don’t have a job.

What Can Young Adults Do to Improve Bad Credit?

There are still some things you can do to improve your credit even if you’re under age 21 and have trouble getting a credit card. You can start by removing negative information from your credit report. Order your credit reports from the three credit bureaus – Equifax, Experian, and TransUnion. Review your credit reports and highlight all the negative information. If you find inaccurate negative information, you can use the credit report dispute process to have it removed.

Negative accounts that have an outstanding balance can often be settled for less than the balance owed. When you settle an account, the creditor accepts a lower, lump-sum payment as full satisfaction for the account. You can also try a pay for delete technique where you offer payment to the creditor in exchange for removing the item from your credit report. If you have negative accounts that have already been paid, the best strategy is a goodwill letter where you simply ask the creditor to remove the negative item as an act of goodwill.

If you have a verifiable source of income, you may be able to get approved for a credit card without a cosigner and without trouble. However, if this isn’t the case, you should try to salvage at least one of your existing credit accounts. If you have an account that’s current on all the payments, stay current on them. This account will help improve your credit score.

If you have an account that’s past due, but hasn’t been charged-off yet, figure out how you can bring the account into current status again. After your account is charged-off, there’s very little hope of getting the creditor to reopen the account, even if you pay the balance in full.

Turning 21 won’t necessarily make it easier to get a new credit card since credit card companies are required to ask for personal income for every new credit card applicant. So, the goal is to keep as many accounts open as possible so you can begin adding positive information to your credit report.

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