The concept of credit building as part of the credit rebuilding process may seem like somewhat of a paradox. Often, by virtue of your poor credit rating, you will need to build credit, but in order to build credit, you usually need an adequate credit rating to do so. For the despondent debtor, then, it may seem as if credit building is a lost endeavor before it even begins. However, it must be stressed that repairing one’s credit will not happen overnight.
Of course, while the lack of lenders that may want to deal with an individual with a low credit score will definitely be a limiting factor in trying to build credit, the use of credit is widespread enough that there will be a lot of lenders out there to weed out before finding one that will be willing to take a chance on issuing him or her credit.
In the game of credit building, the objective often must be to start small. One route that is commonly suggested of creditors is to try to strike up an agreement with a local merchant in purchasing a given item on credit, such as a piece of furniture or electronics equipment.
Along the same lines, consumers may be able to build credit by negotiating with certain dealers who trade in specific, high-priced products that are equally necessary to the buyer, if not more so. One particular example is the purchase of a new or used car, which will almost certainly cost its recipient thousands of dollars when all is said and done.
Seeing as few people would be capable of covering the price of an automobile up front, most would instead need to pay in installments. Thus, for the person on the mission of credit repair, this is another opportunity for credit building. As with arrangements with other merchants, contracts signed with car dealers for loans will also probably result in high interest rates and down payments, but the potential improvement to one’s credit rating may be of a more substantial benefit.
Another way to build credit is through securing real estate, namely as a homeowner or apartment leaser. Credit building through such a strategy may likewise involve significant search times, expansive searches geographically at that, to find an amenable creditor. Just the same, some realtors/realty agencies may specifically target lower-income and lower-credit clients in hopes of making a sale, especially in inhospitable housing markets.
If possible, debtors may have to employ a third party in securing a home loan. One possible solution is interaction with a bank, financial institution or credit union to discuss financing the move into a new house or loft. Applicants might even have a family member or friend with better credit cosign on their behalf, although, this puts both parties at risk.