How To Rebuild Bad Credit Scores
Having a good credit score has become an important part of being financially free. In the old days, a good strong handshake was enough to show that you are a credible borrower. Unfortunately, these days it takes a little more. Your credit score is based on how you have handled your finances with loans in the past. It is important to have a good credit score if you are looking to get a credit card or take out any type of loan. It can prove to be tough to build up your credit score if you have made mistakes in the past, but it’s not impossible!
The first thing you will want to do is get a copy of your credit report. This report will tell you all of the debts that you have no matter if they are past due or not. Read through your credit report and write down any debts that are past due.
Next, it is important that you start paying back your old debts. Pick one account a month and send a payment to them if that is all you can currently afford but at least do something to show them you are trying to pay the debts back.
Now the fun part, once you have paid back your old debts, start opening new accounts. Although cell phones and regular utility bills do report your payments in most cases, these accounts take a very long time to build anything for you. If you are looking for something that will work a bit faster, you will want to open a secured credit card. Secured credit cards are accounts that are designed for people with bad credit or people that are new to credit. To use a secured credit card, you must give a security deposit to the bank that issues the account. These security deposits are usually around $250.00 and will become your credit limit. Most of the time, security deposits are refundable and you will receive a refund of this deposit after 12-18 months of keeping the account in good standings. At this point, your secured credit card has become an unsecured credit card and you are now borrowing the banks money!
When using secured credit cards to build your credit score, it is important to remember a few things. First off, never miss a payment. A best practice is to send your payment a minimum of 3 weeks in advance to give the postal service time to get that payment to the bank, and the bank time to process your payment. Also, never spend more than 50% of your overall credit limit whereas, this shows that you may not be financially secure enough to have a credit card. Finally, the golden rule, NEVER BUY ANYTHING THAT YOU CANNOT AFFORD TO PAY FOR! It is very important to live within your means.
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Time December 30, 2011 at 1:33 am
[...] Now the fun part, once you have paid back your old debts, start opening new accounts. Although cell phones and regular utility bills do report your payments in most cases, these accounts take a very long time to build anything for you. If you are looking for something that will work a bit faster, you will want to open a secured credit card. Secured credit cards are accounts that are designed for people with bad credit or people that are new to credit. To use a secured credit card, you must give a security deposit to the bank that issues the account. These security deposits are usually around $250.00 and will become your credit limit. Most of the time, security deposits are refundable and you will receive a refund of this deposit after 12-18 months of keeping the account in good standings. At this point, your secured credit card has become an unsecured credit card and you are now borrowing the banks money!Source: jemcreditcards.com [...]