Sunday, November 4, 2007

Credit Cards and Credit History

Responsible credit card use can help you get out of a bad-credit situation. If you’ve had some problems making payments in the past, or know your credit isn’t perfect- then you know exactly how it effects you. When you apply for credit, you get turned down. Even a new employer can use your credit score as a reason not to hire you! Your automobile insurance rates can increase if you have poor credit. Getting an apartment will be as impossible as a mortgage, since most landlords rely on your credit score now to determine whether or not you are a good tenant.

So- if you have already damaged your credit or it’s just not as good as you would like, you can use your credit cards to start improving your credit score. If you already have a credit card, start with that one, but if you don’t have any credit cards at this time- even with poor credit you will be able to qualify for several of the credit cards for bad credit options available. These cards will have higher interest rates and less perks than cards designed for people with good credit, but they will still work to help you start repairing your credit.

If you are still having trouble getting approved for credit cards, you can try getting a secured credit card or asking a family member to co-sign your application.

First, order a copy of your free credit report from each of the three credit bureaus and make sure there are no mistakes that are affecting your score. Take appropriate steps to correct any mistakes that may be on the reports.

Next, use your credit card as a credit rebuilding tool. Each month, make one or two purchases with your credit card and immediately send in the payment. (Some cards offer a grace period, and if you make your payments within the grace period you won’t even have to pay interest!)

Each time you send a payment on time, it is reported to your credit report. Several months of doing this will slowly increase your credit score. Also, if you hadn’t had any available credit listed on your credit report, just having access to the credit card limit can also help increase your credit score. Just be careful that you don’t max the card out because then you’ll lower your score by using a larger percentage of available credit.

Credit Card Advice | Tyler Thomas

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