Restoring Credit

Q: I am a recent college graduate and have a very low credit score. I had six credit cards that I let go into collections. I will start my career — which, ironically, is in the financial services industry — during the summer. I realize my past mistakes and how they may affect my future. I contacted the collectors for the accounts and paid them all off. What else can I do to start rebuilding my credit?
— C. Blakes, Bensenville, IL

A: I, too, found myself in a similar credit conundrum as a youngster in college. Although it seems very daunting to begin to rebuild your credit, here are a few options:
Since you paid the amounts off in full, ask the credit agency to report your collection as “paid as agreed” instead of the negative notation of “collection paid or paid charge off.” Read Everything You Wanted to Know about Credit But Were Ashamed to Ask by Renee Crenshaw and Anthony B. Miles (Rising Star Foundation; $29.95).

After six months at your new job, reapply for credit. You can start with a gasoline card or department store card. To avoid getting into the same situation as in college, don’t overspend on the card. Spend $50 monthly on the card then pay the balance off each month, on time. After six months, repeat this cycle with a major credit card.

To see your progress, check your credit report at Compare the score now to a year from now. You should see your score improve significantly.