Credit Cards For Bad Credit Will Repair Poor Credit Scores!

The best way to repair bad credit is with a credit card for bad credit which is usually a secured credit card. The type of card usually requires you to pre-load the card with funding and the amount you load is what you can spend. Many secured credit card companies will report to credit agencies. This makes this card a glorious opportunity for establishing credit when your overall credit score is very low.

If you have poor credit it's obviously due to not paying your bills and once it goes to collections it will stay on your credit report from 3 to 10 years (Stature Of Limitation) depending where you live. The average is around 7 years. Once the Stature Of Limitation has expired the creditor is barred from taking any legal action against you. They can still attempt to collect the debt, but since they can't sue you there is little they can do. The best thing to do is arrange a payment plain you can afford and start to pay it back and at the same time rebuild your credit score with a prepaid credit card.

When a credit company investigates your credit report and finds that you have a ton of negative results listed, you've not held employment for an extended quantity of time, or have moved to various areas quite frequently. They will read you as a high risk, therefore, you will probably be denied any type of credit limit with a credit card that is offered with that company unless it's prepaid.

Secured cards allow you to pre-load funds from $200 to $1000. You don't really have to worry about approval since they are not lending you the money, it's your money you are spending. This makes it very easy for you to start rebuilding your credit fast.

After a few months, you should be able to see improvement in your credit standing. It's a good idea to check your credit report after six months of using your secured credit card. If your credit score is really low you might have to continue to use your prepaid/secured credit card for 12 months or longer. The good news is you will be rewarded for your effort at repairing your credit score.

You last choice to repair a bad credit score would be to forget credit cards entirely and open a checking account and use debit cards, that act some what like credit cards as so much as convenience, in which you'll use to make purchases. Debit cards are used in place of checks. Instead of writing a check to create a purchase, or pay a bill, you can merely use the debit card instead. Some debit cards operate in a way that is considered credit. However, you'll only be able to pay what's obtainable through your checking account. Make sure you limit your use of an overdraft as this looks just like bad credit when it's used often.

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Raising Your Credit Scores

According to FICO, the factors that make up your credit scores fall into 5 main categories. The categories are listed below with a percentage reflecting the relative weight they carry in making up your credit scores.

Payment history - 35%

Amounts you Owe - 30%

Length of Credit History - 15%

New Credit - 10%

Type of Credit in Use - 10%

Note that of the categories above, the two most important are Payment History (past & present) and current debt load (Amounts you owe). That's 65% of the weight of all information taken from your credit history and is key factors used to determine your credit worthiness.

Payment History

Making payments on time, I would say, is the single most important thing in determining your credit scores. If you are 30-120 days late, this can impact your credit scores significantly. Opening payments on old collection accounts can bring down your credit scores as well because any payments you make will report late. If you're not able to pay in full on old collection accounts, then let the sleeping dogs lie.

Amounts you Owe

Balances under 50% of what you owe on credit cards tend to increase your scores, over 50% of what you owe, tend to drag your credit scores down. Others suggest not exceeding 30% of your credit limit. If you are in good standing with the credit card company, ask them to raise your credit limit. Most companies will do this for clients in good standing. The higher the limit to debt ratio, the higher your credit scores.

Length of Credit History

Make sure to keep your accounts open, revolving and current. Complete inactivity can reduce your credit scores drastically. I feel some of the worst advice for people getting out of debt is for them to close their accounts and cut up their credit cards. If you must cut up the credit cards, keep the accounts open and pay them down. If you are forced to close an account with a long credit history, try to balance it with opening an account with an equal or larger credit limit and low interest rate. This way you raise your credit worthiness, you keep your history going and kill your debt all in one blow.

Type of Credit in Use

Car loans and mortgages favor over a target card or payday loans. I'm not saying to go out and get yourself a mortgage or car loan to raise your credit scores. You should never take on more debt than you can handle. When it comes to qualifying for a home loan, your debt to income ratio weighs in as heavily as your credit scores (but that's a whole other article). Payday loans are frowned upon versus maybe a credit line with an outfit like Sears, Chase, American Express or BofA. With a payday loan just about anyone with a paycheck and a pulse can qualify versus the latter which requires more credit-worthy applicants. You may want to shy away from Capital One or Providian credit cards, which start you off with low credit limits and tend to keep you there. These credit cards are directed toward people with challenged credit, charge high fees, and are red flags to a creditor looking over a credit report. Secure credit cards with little or no fees, would be a better choice. To sum it up, be picky with who you open your trade lines with.

New Credit

New credit falls in line with type of credit. Opening a $5000 credit line with your bank, favors a $5000 payday loan. To sum this article up, pay down balances on credit cards under 50% preferably down to 30% or less of your credit limit. Keep accounts open and revolving every month, call your credit card company and ask them for an extended line of credit. Be choosy on who you open a credit line with, pay bills on time and keep them current. For those of you who are not able to acquire mortgages or car loans, pay your student loans and/or child support payments and keep them current. These are some things you can start doing immediately to impact your credit scores.

Keep in mind, high credit scores do not automatically qualify you for certain loans, which leads into my next article "Do High Scores Equal Good Credit"

David Phillips THE REFI GUY is your Real Estate Advocate for Consumer Knowledge @ http://therefiguy.net/ was a loan officer for five years. The purpose of THE REFI GUY is to close the gap of knowledge between the public and professional finance world in a light and entertaining manner.

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Repair Credit Scores Before Seeking Financing

Many consumers will know long before they make a big financial move that they intend to do so. Rarely do consumers who work for a living make an impulse buy as large as a vehicle or home. Such large investments do require some forethought and financial planning. Part of that planning should be to investigate one's existing credit score and work on improving one's credit rating well before financing ventures are sought out.

The Problem With Waiting

Consumers who are about to embark on a big-ticket purchase such as the dream home they finally found will suddenly come to realize the importance of their credit even if they paid it no attention in the past. When a consumer finds the house they now can not live without, they will need to apply for a mortgage with a lender. The lender will make their decision based largely on a consumer's credit score. If that score is low and the credit history is marred by financial issues, there is a strong likelihood the loan application will be denied right away.

The problem with waiting is that while credit improvement is always possible, it takes time to make a credit score get better. Consumers will have to put forth the effort to make their credit better. Bills will need to be paid on time and open accounts analyzed in order for credit scores to rise. Unpaid creditor balances should be eliminated as efficiently as possible.

Looking at the Timeline

These actions are the only way to improve existing credit scores. They do work but it will not be an overnight activity. Once a consumer orders their credit reports, it takes up to 45 days for the credit reporting bureaus to investigate and correct inaccurate information that a consumer disputes with the bureaus. Creditors will take even longer to update score-relevant credit information. It can take several months for consumers to notice a difference after paying debts on time and avoiding new lines of credit.

For those with plans of financing something in the future, there should be a credit repair lead time of at least 6 months, if not a year, if the consumer wants to make a marked difference. With this amount of time, consumers will have the ability to review the details of the credit and make the necessary effort to repair past financial mistakes.

Credit Matters Elsewhere

Credit scores matter for much more than just mortgage loans and vehicle financing. These days industries of all kinds are relying on a consumer credit score to make important decisions that affect a consumer's life. For instance, basic services like electricity may require a credit check when new customers apply for service. Without a good credit record, customers will likely have to pay a hefty down payment in order to get services activated.

For consumers looking for a new job, especially in the areas of finance or for government employment, a credit score can make or break your chances of being hired. Low credit scores can indicate that the applicant has difficulty managing their own financial matters and may not have the characteristics to be successful at a specific job. If a consumer is looking for a new place to live, it is important to know that many landlords will also require a credit check before agreeing to rent.

Those who drive and must have car insurance coverage to stay within the laws will find they must spend more for insurance premiums than another person with similar insurance needs. Insurance companies use credit scores to predict reckless behavior. Studies show a correlation between low credit scores and the increased likelihood that policyholders will file one or more claims.

Get Your Act Together

Because credit matters in more places than loan offices these days, it is important to keep credit scores high and histories maintained. Ideally, all consumers should request their free annual copy of their credit report from each of the consumer credit reporting bureaus. Credit scores are not part of the free report but can be purchased for a small fee from the credit reporting agencies.

Once the reports come in, consumers should analyze every bit of information the reports contain and dispute all inaccurate/unknown information with the credit bureaus. Investigations will be launched into your dispute and incorrect information will be removed from a credit report. This step alone has improved many consumer credit scores significantly. More than 80% of credit reports are found to contain at least one mistake.

After reviewing and disputing information, consumers need to maintain their active accounts with on-time payments every month. Debts should be eliminated as quickly as possible to improve credit to income ratios. After several months of good payment activity and no new applications for credit, consumers can re-order their credit information for the updated scores before proceeding ahead with request for financing.

This guest post was written by Steve Dowell, a professional writer specializing in topics related to personal finance, debt relief, credit repair and more. Pass through creditrepair.org for more tips and advice.

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Credit Scores / Credit History Repair

Credit scores are numbers ranging from 300 to 850. These scores are a measure of a person's creditworthiness and financial stability. Over the years they have become an important part of a person's future. Lower credit scores can affect your life but credit history repair can help.

Financial institutions and creditors use credit scores as the basis for making decisions on granting credit. Each bureau has it's own formula for figuring credit scores. It consists of numbers being put into their own formula. The main factors for these formulas are:

The amount of debt a consumer has
The length of time a consumer has had credit. Newer accounts are riskier
The balance to limit on each account. High balances are a danger signal
The mixture of the types of accounts a consumer has (i.e. credit cards, mortgages, installment loans)

Any negative information in these areas will need to be worked on and changed in order to get higher scores.

No open credit, no scores. This can create problems for you the consumers. Not only are the scores used to determine if credit is granted, it determines the percentage rate that will be given for that account. Credit scores are also used in decisions for employment, promotions, rates for car insurance, deposits for utilities and prospective landlords plus much more. Know what you need to do to have the highest possible scores.

There are three credit bureaus that are pulled to obtain consumer credit scores. These are: Experian, TransUnion and Equifax/CSC Credit Service. Each bureau is a commercial business not affiliated with the government. They are multi-million dollar companies that operate for profit. The bureaus do not verify the accuracy on credit reports. The bureaus say it is your duty to prove the accuracy on your report. This makes credit history repair very important.

These bureaus make their money selling your credit report to others. They even sell your personal information to telemarketers and mailing list companies without your permission. A consumer with bad credit means more business for the bureaus. This type of consumer will apply for credit 10 times more often than consumers with good credit. It is very important to change your situation.

TransUnion and Experian will also sell credit scores to consumers but they are not FICO Scores. They are scores the bureaus have created for their own use. These scores can differ as much as 100 points from FICO Scores. Equifax does sell consumers the actual FICO Scores. The scores of each bureau will differ since each bureau has their own way for figuring them. Also, creditors do not always report to all three bureaus. You need your credit scores from all three bureaus in order to know what is going on with your credit and to be able to keep track of any changes on your credit report.

Take control of your credit today. Credit history repair is the answer. Learn what can be done for your credit situation. Go to http://www.restoringcreditscores.com/ and sign up for a free consultation.

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