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[R84]Rebuilding Credit Credit Cards

by Bob Carper, Bob

Try to rent something? You might as well go home. Go to your friendly dentist? Without a credit card, your tooth is going to ache for a long, long while. Did your car break down yesterday? Chances are even the friendly tow truck will not get you to safe haven without a valid credit card.

In so many words, a valid credit card is not a luxury anymore. It is a necessity. A secured credit card may be a good solution for any person looking for credit repair, as long as he or she understands their options. Properly used, secured credit cards can actually restore a person's credit rating and get him/her back on the right track in financial life.

Secured credit cards work closely with the bank. They have the same look and feel as unsecured credit cards with just a few differences. Instead of the creditor offering the banking customer a line of credit, the bank identifies its own credit line with the customer's checking or savings account. Depending on the credit card being issued, the customer's bank account will likely be used as collateral. If the customer fails to make a timely payment to the credit card, the minimum amount will be deducted directly from the customer's bank account.

If the customer has bad credit for any reason, banks and creditors are unwilling to extend credit. This can make it difficult, especially in a society that is completely tied to credit. However, if a customer gets a secured credit card, he or she will be proving himself creditworthy, provided the bills are paid on time. Eventually, the bank or creditors may see the customer has proven himself again and will begin to offer extended credit.

The customer does not have to worry about debt with
these types of credit cards. The only credit line
available is what the customer has put into the special savings account. Keeping it paid will ensure that this credit line is always where it should be, at a comfortable range for the budget.

There are some disadvantages to using secured credit cards. If the customer fails to make timely payments, he or she will have to deal with their high rates of interest and other various late fees. These penalties can continue to rise to where eventually the customer will be broke and will have nothing to fall back upon. This is why it is ultimately important for the customer to keep that bill paid on time, every time.

However, this is still the best option for those who are looking to repair and rebuild their credit. Secured credit cards are the first step to financial freedom and eventually a creditworthy life.

One's credit history is becoming increasing important. For people struggling with bad credit, sometimes, it feels like the number is tattooed on your forehead, especially, if you've made an attempt to secure a home loan, auto loan or personal loan.

The fact is that creditors are not eager to extend a line of credit to you, if your FICO score is not above the 650 range. There are a number of reasons why your FICO score may be low - bankruptcy, too much debt, not paying your bills on time, etc.

The good news is that your credit score can be improved. The key to increasing your credit score is to maintain a line of credit and prove to your creditors that you are capable of paying your debts on time and not maxing out your credit line. These four simple steps will help you improve your credit score:

1. Get a copy of your credit report. Take advantage of the free government credit report from each of the National Consumer Credit Bureaus: Equifax, TransUnion and Equifax. This will help you to understand your starting point. It will answer the question - "how bad is my credit?"

2. Apply for a line of credit. You can apply for an unsecured credit card or a secured credit card (this is sometimes referred to as a "prepaid" credit card). Go to the website below under "Credit Cards for Bad Credit" for additional resources.

3. Once you have the card, do not max out your credit card. Try not to exceed 70% of the credit card's limit. For example, if the credit card limit is $1000, you should only charge up to $700.

4. Always, pay your bills on time. This accounts for 35% of your FICO score. It's the most important factor in proving your credit-worthiness to your creditors.

Practicing these four simply principles will help you to increase your credit score in the coming months.

Article Source : Pg. 3

About Author

Both Bob Carper & Delia Galley are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Bob Carper has sinced written about articles on various topics from Home Improvement, Arts and Games. Bob Carper is a veteran information systems consultant with an MBA from Pitt. For additional information go to or. Bob Carper's top article generates over 1220000 views. to your Favourites.

Delia Galley has sinced written about articles on various topics from Buying and Selling Home, Build Online Business. . Delia Galley's top article generates over 3600 views. to your Favourites.