Due to circumstances and unexpected events in life, credit scores can dip up and down. In the event that your score has taken a dip, you may experience some difficulty meeting all requirements for most of the cards out there. Luckily, there are cards particularly intended for individuals attempting to restore or rebuild their credit.
In spite of the fact that these cards don’t come with the best terms, it gives you a chance to demonstrate your reliability to future and current lenders. Once you have re-established your credit, you can gradually work your way up the credit score ladder. The higher your score the greater your chances of taking on credit in the future. There are for the most part two sorts of cards that can help you revamp your credit; secured and unsecured. Both have advantages and disadvantages.
Secured Credit Card
First, let’s discuss the secured credit card. Anybody can apply for a secured card. A secured card simply means that you supply the funds in advance to cover your credit line. It usually begins at $300. You have secured the debt; therefore, there is no risk to the credit card company. There is an advantage to doing this. As long as you select a company that reports to the major credit agencies, you will receive a favorable score with responsible use and timely payments.
Unsecured Credit Card
The unsecured card is just that. It is not secured with your personal funds. The lender is taking the risk. The advantage is obvious-you don’t have to supply the funds. However, the disadvantage comes at a cost. You will no doubt be charged a high interest rate. In addition, there may be an annual fee. The fee can be anywhere from $39 to $99 and even higher in some cases. Your line of credit will most likely be fairly low with your annual fee using a portion of it the first month. Be that as it may, the majority of these cards will permit you to build your credit line after 5-6 on time installments.
Good Credit Card Companies to Rebuild Credit
The following cards are a good place to start if you are looking for a card to help you rebuild your credit:
- Capital One Platinum
- Open Sky
- Green Dot Premier
- First Progress Platinum
- Merrick Bank
The above is a short list of some recommended secured cards. In our opinion, a secured card is the safest and most financially responsible way to restore your credit rating.
Use Credit Building Cards to Improve Your Credit
Your installment history represents 35% of your FICO rating. It’s essential to pay your bills on time every month to raise your credit score. Set up bill updates. Set reminders on your phone and sign up for email and text messaging alerts. These will remind you of an upcoming payment date. Don’t let a busy schedule make you forget to pay your bill.
Change Date of Payment
You can even request that the card company change your date of payment. Just make sure you do this a month ahead of time. Another important factor to consider is try your hardest to not run up your card to its limit. It’s suggested that you hold this number under 30%. So in case you’re general credit line is $1,000 do whatever it takes not to go over $300.
Repair Credit and Enhance FICO Scores
It’s critical to note that repairing your credit is somewhat similar to getting in shape. It requires significant investment and there is no fast approach to achieve results. Slow and steady wins the race. Monitor your credit rating with an online credit system such as Credit Karma. It’s free and you will get suggestions and offers that match your credit history.
Important Things You Can Do Right Now
Check Your Credit Report – Credit score repair starts with your credit report. As mentioned above, sign up for a free credit monitoring system. If this isn’t available to you, you can request a free copy of your personal credit report in writing. There are three major credit bureaus and you are entitled to a free copy of your report once each year. Your credit report contains the information used to ascertain your score.
Check Your Credit Report Monthly
Checking your credit report monthly will help you catch a mistake should there be one. Specifically, check to ensure that there are not any late installments wrongly recorded and that the sums owed for each of your open records is right. For example, you may have been reported to the credit bureau for having non-payment on a specific account. After paying the account your credit report should reflect that. If it doesn’t, you need to correct the matter.
Setup Payment Reminders – Making your credit installments on time is one of the greatest contributing elements to bring up your credit rating. If you are prone to forget, then you should definitely consider setting up an automatic payment. Most credit card companies offer this service at no charge. This will work for you as long as you have a steady and reliable income.
Lower Your Debt
Lowering your debt can be a challenging yet very rewarding endeavor. Keep track of the total amount of credit card debt you have and work on it consistently. Make more than the minimum payment each month and you will see your overall debt lower while your credit rating rises.