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!
There are many benefits to be received by getting as much unbiased information as you can on credit cards.
creditcard-4u.com is a resource site that you should look at and see what type of cards are available to fit your circumstances.
I'm sure there is information there that can help you. It is a source to help you understand the types of cards and options which are open to you. You will find the information on travel reward cards target="_new" href="http://www.creditcard-4u.com/credit-card-information">very interesting Check it out you may save money!
Peter Burke is a regular contributor of articles with the aim of being able to inform and help people with specific problems!
Peter Burke MBA has been writing Journals and Articles for academic publications for over 7 years and is Managing Director of a Consulting Company in the United Kingdom.
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