Loan for people with bad credit history

Q I've always dreamed about owning a business of my own, but I feel it's only a fantasy because during the course of my life, I never had financial guidance and have destroyed my credit. Is there a way I can realize my dream?

Name withheld

A Yes, there is something you and the many people who find themselves in the same boat can do. This strategy is based on the understanding that creditors are as interested in recent positive credit history as they are in past problems. So over the next two to three years, put a new face on your credit history. You already have a steady job, which is important. Second, budget what you spend so that you live within your income, and if there are debts, pay them off. Open a passbook savings account, and use this to get a loan that you repay in six to nine months.

Get yourself a secured credit card and use it so that you can pay off the balance each month--the interest is expensive. Then, as you reestablish credit, apply for other credit cards. With one or two, you might have a revolving balance that you pay off in several months, thereby showing you can handle credit repayments.

If you need more help, consider working with a credit counselor. You can find a local member of the National Foundation for Credit Counseling at www.debtadvice.org. There's usually no charge for initial counseling.

Paul and Sarah Edwards' most recent book is The Entrepreneurial Parent. Send them your start-up questions at www.workingfromhome.com or e-mail entmag@entrepreneur.com.