You have the right idea with “recreating” a credit history, but it’s really more like reestablishing your creditworthiness. You have demonstrated positive credit behavior in the past, but you’ve hit a bump in the road and lenders want to see that it was a temporary mishap, not a pattern. Any explanation you can provide could give context to the negative items on your credit report.

I wish you the best of luck. Please come back and let us know how you’re progressing. We’d love to hear tips you learn along the way. Thanks for posting.

Why? I think it’s inaccurate to report “snapshots” of credit balances (i.e. account balance at the time the credit card company supplied it to the credit reporting accounting). One can always pay off the balance of their cards and never carry a balance that would result in paying interest. However if charges are made around the time the billing cycle closes then one is penalized in a credit report snapshot. This is the case, even though that recent purchase falls in the next billing cycle. Many people choose to spend using a credit card and then pay off their entire balances through direct payments from their checking accounts. Think about it – so many people don’t carry cash anymore. How many people use mileage and other reward cards and pay off the entire balances each cycle?

As a credit card users, one meets the terms of the credit agreement if the bill is paid in full. The “snapshot” approach to credit reporting would require one to make a payment on the date the billing cycle closes to report a zero balance. Additionally, one would have to stop using the card around the date the cycle closes to ensure pending transactions are not reported.

So Tip 3 should add that when one applies for credit or a loan, one should stop using your credit cards the month before your credit is run by the prospective creditor.