Rebuild Your Credit With Credit Cards
Getting a credit card to help rebuild your credit history is a very wise decision. A credit card can help you create 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.
On your card you will have to pay an annual fee and a high interest rate. Unfortunately this is an unavoidable cost, however with proper use you can ensure this is the last time you will have to pay high interest rates.
Your card will have a credit limit around $300. The other alternative is to get a secured credit card.
A secured card you will have to put a deposit down and the amount of your deposit is the credit line on your card. This card will report to the credit bureaus however it will not give you the same benefit as an unsecured card.
Both of these cards offer online approval. However before you apply for any card double check and make sure that card does report monthly to all three 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 shows the credit bureaus that you do have available credit; this is called your available credit to debt ratio. In addition it shows the bureaus that you do use your credit.
The last option for a card is a shopping card or a credit card that is only accepted at a specific location. We do not suggest these cards; they often come with large upfront payments and only report to one credit bureau.
A prepaid debit card is another option. We suggest this option to individuals in chexsystems because it will work just like a bank account.
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.
