#how to repair your credit
Secured Credit Cards Help You Build or Repair Your Credit
A secured credit card is called that because you actually open a savings account attached to the card, then your spending limit is related to how much you have on deposit.
Getting a secured credit card for credit repair or credit building
You might think that not owing money is good for your credit rating. In fact the opposite is true. Most lenders, especially for cars or home loans want to see a record of your payment history. This is called having lines of credit and is related to revolving credit which is what you have with credit cards. It’s called revolving because you spend it, pay it back and spend it again.
If you have never had credit or have had poor credit in the past you might find it difficult to get credit. A secured card or two is a great way to get started. They are generally easy to get, and do wonders for your credit rating if you use them correctly because the bank who issues them will report your use and payment history to the credit reporting companies.
Secured cards may have higher interest rates and fees but you don’t usually need to keep them going for more than 1 year, then you can change them into unsecured cards sometimes with the same company.
It’s important to use your credit wisely, the better your credit rating the less you have to pay to get car loans home loans, even credit cards. So spend wisely, pay more than the minimum payment every month and pay on time!
Building your credit History
First, get a couple of secured cards. These are called secured because you actually open a savings account attached to the card them your spending limit is related to how much you have on deposit.
Next, spend small amounts wisely, pay more than the minimum payment (or pay it all) every month and pay it right when you get the bill, don’t wait for the due date and don’t be late.
Responsible use of a credit card builds a good credit rating, marking the owner as credit-worthy. For people with poor credit or no credit, a secured credit card is the fastest, most effective way to reestablish themselves as good credit risks in the eyes of lenders. Secured cards are easy to get and the card issuer reports your payment history to major credit bureaus every month.
Using credit wisely is important for several reasons. your credit reputation influences the rates that will be paid on a loan for a house or car, or for a credit card. The better your credit reputation, the lower the interest you will have to pay.
Although secured cards tend to have higher interest rates and annual fees, they provide a valuable steppingstone to unsecured credit.
Establish a sound payment history
Establishing a payment history will help you qualify down the road for the major credit cards. Using this secured card appropriately and within the set parameters will help rebuild your credit
After you receive the credit card, make only small purchases, and pay the bill in full when it arrives and well before the due date. Doing this regularly over time helps build your credit history as a prompt payer.
Don’t fall into the seductive traps of credit cards-overspending and/or making minimum payments.
Once you have built a solid credit history over 12 months or more, you can apply for an unsecured card. Or, you can talk to the card issuer about converting from your present card to a regular card.