Credit Cards to Rebuild Credit – 5 Methods to Get that Card
Study reveals that nearly 9 million people in America have problems of bad credit. This forms about 3% of the population, (over 6% of the adult population!) of the United States. So the knowing the credit history of a person is gaining ground and necessity for creditors.
The fact remains if your FICO rate is below 620, people won’t lend you any credit. This FICO score being low has various reasons like bankruptcy, excessive debts, inability of rendering payment of bills at proper time, among others.
However, there is a ray of hope! Your credit score can be improved. This can be done by maintaining your potential for credit,however small it may be and making it clear to creditors that you’re capable of paying your debts in time, without having to having to resort to more credit. To help you improve your credit there 5 basic steps below.
1. Get yourself a copy of the your credit report. Then utilize the various advantages of the credit report of the government (which is free) from every Bureau of the National Consumer Credit – Equifax and Trans-Union. This will get you to the start of the process. It will give you a clear picture of your present rating.
2. File an application for a credit line, which may be a secured or unsecured credit card.
3. On getting the card, do not make blind purchases. Restrict the purchases to 70 percent of limit imposed on the credit card. i.e. if the limit of the credit card is $500, use it to the extent of $350 only.
4. Then, make sure you pay pay bills at the proper time, as this alone takes up 35% of the FICO score of yours. So this is a good base for creditors to judge your creditworthiness.
5. So what about Prepaid cards?
You can also use a credit card that is prepaid. This often a solution that many borrowers are unaware of. This, is perhaps the simplest and most effective method for longer term improvement if you have debt discipline problems. This effectively means you will mean using a credit card to rebuild credit – a ‘win-win’ situation. Use a prepaid credit card that is reported to a Credit Bureau. Only a few of the credit cards regularly report to a credit bureau. So select one that does so, on a regular basis.
One thing to note about prepaid cards is that you must Keep a track of fees. The prepaid card companies often levy fees. Make a prior comparison with many companies in order to secure a credit card where the lowest fee is charged. Bear in mind that some fees need to be paid for credit cards that get reported to the credit bureau, which can be up to an annual fee of$100 – But remember the purpose of this card is to repair credit!
Check the benefits
Some prepaid cards are available with certain benefits, but not all of them. Some give you points which can be used for free call time and other activities.
Preventing abuse of the credit card
Prepaid cards have the distinct benefit that you can never cross the limit, so it enables you to avoid interest and penalties. The implication is that if a report to the credit bureau is made, it is literally impossible to get a FICO score which is lower than your current score with such a card. So you can get credit cards to rebuild credit. It only gets better!
Free Credit Report With Score – Understanding Credit Score Made Easy
Equifax, TransUnion and Experian are nationwide consumer reporting companies required by the Fair Credit Reporting Act or FCRA to provide consumers a copy of their free credit report with score each year. This Act is implemented by the Federal Trade Commission, a consumer protection agency that also promotes privacy and accuracy of information from these three companies.
In general, a credit score is the measure of credit risk computed from a collection of credit reports using a standardized formula. It includes information of your address, how you pay your bills, and whether you have filed for bankruptcy or have been sued or arrested. The scale for credit score ranges from 349 to 849; indicative, for example, that a 640 rating will most likely give you difficulty getting a good loan. This kind of information are sold by consumer reporting companies to insurers, creditors, employers and businesses for evaluation of your credit, employment, insurance and home rental.
So why would you want to have a copy of your credit report? Because it contains information whether you can get a loan and how much you will have to pay; to make sure that it is up-to-date, accurate, and complete before doing a major purchase for car, insurance, house or even to apply for a job. Getting your report on a regular basis makes you manage your accounts well and lets you venture on possible ways to improve or raise your score. This is also one of the many ways to combat identity theft which has been widespread today especially to internet-related transactions.
To get a free credit report with score, you need to provide your name, date of birth, address, and Social Security number. You may also need to indicate previous addresses if you have moved in the last two years. To ensure your security, every nationwide consumer reporting company asks for information that is exclusive to you.
Along with the credit report, it is also advisable to request for credit monitoring to be updated of any strange transaction or activity on your accounts such as change of account information and opening and closing of investments and bank accounts.
Usually a free credit report with score can be accessed immediately although it may even take longer if the nationwide consumer reporting company requires more information to verify your identity.
Under a state law, consumers living in Vermont, Georgia, Colorado, Maine, Massachusetts, New Jersey and Maryland have access to free credit report with score.
How to Get Your First Business Credit Card
People who have a good credit history to back them up will have no trouble in applying for a business credit card, and getting an approval in just a matter of seconds. But for those who have less than perfect credit rating, they could encounter some difficulties along the way.
For those who are just starting up a small business, their credit rating would be based on their personal credit cards. Hence, if they happen to have an unpaid bills in their credit report, it could make it difficult for them to obtain a business credit card. Not having any credit history to back you up is also just as bad as having bad credit rating. Business credit cards are generally unsecured, and call for a good credit record as a primary requirement for their clients.
What to do if you have little or no credit
Apply for a shopping or gas card from a reputable company that reports to the credit bureaus. These cards work just like a credit card wherein you can purchase items form their stores only, and pay it back over a certain period. Approvals for these types of cards are usually easier than any of the Visa or Master card offers. Once you have your shopping card or a gas station card, use it well and be sure to pay for your credit on time. You must be able to prove that you are a good payer. You will need to wait a for at least 6 months so that future creditors can see that you have established credit and are paying on it on a timely manner.
Debit cards with the Visa or Master card Logo on them, that also report to at least one of the major credit bureaus are an excellent way to start building your credit record. Your spending is only limited to the amount of money in your bank account. If you already have had past trouble with bad credit, debit cards are good for helping you to control your spending. Keep in mind that you’re goal is to pay on time. After a while, if everything has been paid well from your account your debit history can be as good as your credit record.
Then again, you may also apply for one of the specialty unsecured credit cards. These cards specialize in helping people with bad credit re-establish credit. These types of credit cards are more lenient in approving their customers, even if they have no credit record or have a bad credit history. This is a good start to re-establish a good credit record for yourself.
Most banks offering credit cards for small businesses would insist on an agreement stating that your guarantor is accountable for the debt you owe, regardless of whether your guarantor has part ownership of your business or not. If you’re going to put a person as your guarantor, make sure that he is aware of duties and that in any case, he accepts his obligation.
Business credit cards are indeed advantageous for big business and small businesses alike. If it is your first time getting a business credit card, remember to do your research
Bear in mind these three major reasons and you shouldn’t go wrong with using business credit cards. By using them wisely, you will be able to build up a good credit reputation for your business. This business credit will be an enormous advantage when the time comes that your business needs enhancement or expansion.