Rebuilding your Credit using a Credit Card

Rebuilding your Credit using a Credit Card

Credit Cards can be very helpful in restoring your bad credit. Apart from medical bills and lawsuits, credit cards are of the leading factors of bad credit. Therefore, it comes as a slight surprise that credit cards can help to fix the debt that it has accumulated over time. You might find it hard to believe that credit cards can be used to rebuild your credit history. But only as long as your bad credit situation doesn’t originate from frivolous spending. A credit card could be the most effective tool to get you back into the good favor of the credit gods.

Credit cards are vital to a credit score, they could build it or break it. Follow the below mentioned tips to nurture you score back to health.

 

 1. Get secured.

Most credit card experts, advice customers with bad credit to pick up their game with the help of a secured credit card. Every time you make a deposit into your bank account, with a secured credit card, you get secured. The card issuer gives you a secured credit card which can be used as a regular credit card, that is it has no conditions attached to it. Ensure you get a secured credit card that actually reports to credit rating agencies every time you make card payments.

2. Avoid applying for multiple cards.

Most people are under the illusion that they require a lot of new credit cards to convince credit agencies that they’re not a risk. This is a wrong  approach, as they do not have enough good credit to ensure their approval for the new credit cards that they apply for. When building your good-credit campaign, it is important that you stay calm and not make any rash thoughtless decisions.

3. Limit overspending with your new credit card.

It is essential for consumers to get acquainted with the credit industry’s latest measuring tool called credit utilization ratio. This comprises of the amount of credit used by you as compared to the amount available when all of your credit limits are summed up. The standard acceptable ratio is below 30 percent.

4. Always make you payments on time.

Lenders and Creditors like consumers who pay their credit card bills on a timely basis and have little or no dues. Paying your bill every month makes you look very responsible and helps you to earn the favor of credit agencies. Paying the entire balance on time shouldn’t be a difficult task is you maintain a low balance. Payment history is crucial, your payment history represents a major part of your FICO credit score.

5. Do not close unused credit cards.

When a customer cancels a credit card that is unused for a while, they lose the available credit that is linked to the card. This could affect your credit utilization rate and can lead to a lower credit score. Make sure you don’t have more cards than you need, this helps to reduce the cards that you close or leave around idle.

 

 

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