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If
you have ever had credit cards, paid a bill monthly, or obtained
a loan, you have a credit rating. When you make payments to
a creditor, they report these payments to credit reporting agencies
that compile your credit report and track your credit history.
If you miss a payment, or even worse, your debt gets sent to
a collection agent, this affects your credit rating negatively,
and may prevent you from obtaining more lines of credit when
you need them in the future.
As
soon as you realize you are in this situation, it is crucial
that you immediately begin to make an effort to repair your
credit rating. To most people, this seems like a difficult thing
to do, but doing nothing to repair your credit will only prolong
the damage for up to seven years. Until your credit is better,
you will find that you are barred from any type of loans or
even activities that require credit, such as renting a car.
One
way to repair your credit is to obtain a secured credit card.
You may wonder how this is possible with bad credit, when you
will most likely be declined when filling out a credit card
application. However, without a credit card, you will have a
hard time proving to creditors your responsibility in making
payments on time.
Try
a secured credit card. Secure credit cards are marketed specially
toward individuals with poor credit. These credit cards work
when the customer applies a deposit equal to their credit limit.
For example, if you make a deposit of $100, your credit limit
will be $100. The credit card company then be use your deposit
toward any balance on the credit card resulting from late payments.
This type of credit card is risk-free for
the company that issues it, because they can always deduct the
balance from your deposit, so it makes sense to issue these
cards to people with poor credit. One drawback to secured credit
cards, however, is the annual fee that most regular credit cards
don’t charge.
After you have obtained one of these secured
credit cards, use it sparingly but regularly, and make sure
you mail all of your payments on time. This will enable you
to slowly, but surely, repair your credit. You will demonstrate
to your creditors that you are trustworthy, responsible, and
pay your bills on time.
Taking steps towards repairing your credit
will eliminate the risk of keeping your credit rating “poor”
for up to seven years. However, after seven years the black
marks on your credit will finally be taken off, so waiting is
always an option. If waiting is not an option, take the necessary
steps toward credit repair. Obtain your secured credit card,
use it responsibly, and reduce the seven-year sentence of bad
credit.
This
website contains information on using a bank secured credit
card.
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