Bad credit? Build and repair credit to buy a house in the U.S.

There are many reasons why a person may have bad credit, such as not paying a credit card on time, failing to repay a loan on the specified dates, being a guarantor for someone and them defaulting, or even something as simple as not paying a mobile plan, which can result in a negative report. If you find yourself in any of these situations, don't worry – you're not the first or only one in this situation. However, you should know that building and maintaining a good credit history not only gives you the opportunity to acquire assets but also translates into access to more favorable interest rates. Therefore, if you are interested in improving or repairing your credit history, keep reading, as we will guide you through building or repairing your credit history.

Credit history initiation

For those who are starting their credit history, credit cards are a strategic tool. Although some advise against their use due to a lack of control, it is possible to start with caution. Opting for prepaid cards associated with bank accounts allows you to establish credit limits based on initial deposits. Responsible use of these cards gradually helps build a credit history, offering other advantages and benefits.

Understand the credit system in the U.S.

The credit system in the United States can be complicated, but understanding bureaus, the letters to be sent, and the process is essential. When reviewing your report, consider the age of the accounts. While some debts must be settled, others, especially those reported as losses ("charge-offs"), can be legally removed from your history after a certain time, improving your credit score.

Secured cards and authorized users

Options like secured cards can help you establish credit from scratch. As you use your own money, monthly payments are reported to credit agencies, initiating the accumulation of credit points. Another option is becoming an authorized user on the card of someone with a solid credit history, which can expedite the credit-building process.

Credit repair

Building or repairing bad credit is a process that requires patience. Although some companies promise quick results, the credit bureau system operates monthly. Understanding the process and having access to tools, mentorship, and knowledge are essential. Here are some tips:

• Get your credit report: I recommend carefully reviewing each section to identify possible errors or any negative information.
• Correct errors: Dispute any errors you find, including incorrect information about balances, payment dates, or accounts that don't belong to you. You can also provide documentation to support your claim and follow the dispute process of each credit agency.
• Pay your debts: Prioritize the payment of outstanding debts. This can improve your credit history over time.
• Establish good credit practices: Make sure to make timely payments on all your accounts. Timely payments have a positive impact on your history, and avoid opening unnecessary new credit accounts, as each inquiry can affect your credit score.
• Consider secured cards: If you have difficulty obtaining a traditional credit card, you can opt for a secured credit card. These require an initial deposit and can help you build credit responsibly.
• Negotiate with creditors and collectors: If you have accounts in collections, negotiate with creditors to reach payment agreements and remove the debt from your credit report.
• Seek professional advice: Consider working with credit repair professionals or financial advisors. Some companies can help you navigate the process and provide guidance.
• Be patient: Credit improvement takes time. Be consistent in applying good financial habits and tracking your progress.

It's important to understand that credit bureaus are independent companies that legally trade credit information. There is a legal framework that allows individuals to dispute debts and errors in their credit reports.