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Wednesday, December 24, 2008

Credit Cards To Help Rebuild Credit

By Dan Moskel

A credit card can help you rebuild your credit score. This card will help your ratio of available credit to debt and you can build a positive payment history.

This is how you will build positive credit to your damaged score. Unfortunately because of your low score you will have to pay higher interest rates.

It is very important to remove negative items on your credit, while improving your score. You should know that once a negative item ages four years then it has much less impact on your score.

If your credit score is low you will still be able to qualify for a sub prime credit card. This means you will pay approximately 19% APR and an annual fee.

Your card will have a credit limit around $300. The other alternative is to get a secured credit card.

A secured card works like this; you deposit money into a bank account with the credit card issuer and they give you a credit card with the amount of your deposit as your credit limit. Your card will work just like an unsecured card; you will have monthly due dates and minimums to pay.

Both these types of cards offer instant approval. Before you apply for any card double check and make sure that they report to all three credit bureaus.

A helpful tip to get the most positive credit built from your card is to keep your balance at 10% of your available credit. If your card has a credit limit of $300 it will help if you can keep your balance at around $30.

This will help because it shows; you use your credit, and use it responsibly. In addition having available credit will increase your available credit to debt ratio, this shows the bureaus that you are not in over your head.

The other alternative for a credit card is a shopping card. This card is only accepted through a designated catalog or through a website. These cards often only report to one credit bureau and have large fees.

You also can apply for a prepaid credit card however these cards typically do not report to a credit agency. However they do work like a bank account and if you are in chexsystems this is a good choice.

In sum we suggest you open a sub prime credit card for your credit score to get the most benefit. This card will help improve your score by creating a positive payment history and improving your ratio of debt to available credit.

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