Many people have learned that attempting to maneuver through our society with bad credit is a difficult state of affairs. What sets our country apart from others is our ability to borrow money, but with little to no credit that is impossible.
The economy of our country is based on spending, which means that repairing bad credit is a likely possibility. The first step to repairing bad credit is to make the commitment to never pay any bill late. In fact, your best policy is to pay each of your bills two weeks early.
Before you begin repairing your bad credit you must first learn to live within your means and never-never spend money that you do not have. This will take discipline on your part but to obtain good to excellent credit, this commitment is essential.
Once this commitment has been made you should apply for a credit card for those with bad or less than perfect credit. There are many companies to choose from such as, Capital One®, First Premier Secured MasterCard®, and Orchard Bank Visa Cards just to name a few.
All of these companies will charge an activation fee from $25 to $74 and a few will charge a $9.95 annual fee. There are many companies online, so choose the card which best suits your needs.
Now that you have your card it is critical for you to understand your card and how to use it solely for the purpose of building your credit. To accomplish that, it is important for you to understand how a credit report works.
A Credit report is comprised of every company that you have had credit with in the past. Each month, these companies will report to 3 major credit reporting companies as to how you have been making your payments. They report the amount of credit which was extended to you, your current balance, the amount of each monthly payment and of course if you made your payments late or on time.
In order to have a high credit score it is important to only use 30% of the available credit allowed for each card. This means that if you have a credit card with a credit limit of $300, you should only use $90 of that limit. Credit card companies pay close attention to this as a customer with a high balance is a higher risk for them. A customer with a continual high balance is a customer who may be headed for trouble and the credit reporting companies will penalize the user for this behavior.
Before you begin to repair your credit you should request a copy of your credit report with your current scores from the 3 major reporting companies. With this information you will know where you are and where you stand and by knowing that you will be able to progress to your ultimate goal.
Check your credit report thoroughly for any information which does not belong to you, such as a judgment or property or tax liens. If you do have such items on your report you will need to notify the reporting companies and file a protest and they will take thirty days to investigate the matter.
Once you have your credit card and your credit report and you are certain that the credit report is accurate, you are ready to begin the process of rebuilding your credit. Keep in mind that rebuilding your credit requires time, patients and discipline on your part.
With that in mind you should only use your new credit card to build your credit. Never use this card for a shopping spree or any other unnecessary spending. This card is only to be used in order to rebuild your credit.
Use your card each month to buy a tank of gas, or two, for your car. At the end of the month, pay the entire balance owed on your credit card. Follow that same process each and every month. In this manner you will never pay any interest fees. Interest is always charged on your unpaid balance.
The next critical step is to make your payments early. If your monthly payments are due on the 20th of each month, make your payment by the tenth of the month. If you make those payments online each month, the payment process is instantaneous and simple.
Rebuilding credit can be an empowering endeavor. You will notice a since of pride each month as you make your payments on time and your credit score begins to rise. Check your credit score every six months to give yourself that boost of encouragement need to continue.
Rebuilding your credit is possible with hard work and due diligence. Get yourself back into the credit game by rebuilding your credit today.