Rebuilding credit can be one of the hardest but most important things you can do to secure your future. Poor credit can come from many circumstances in life; examples include bankruptcy, divorce, an accident, or an illness that may have kept a primary earner from being able to work, or built up huge medical bills. Sometimes it’s simply poor financial planning or decisions that caused the problem. No matter how you may find yourself in this position, the sooner you start rebuilding the better. You have many options and avenues to explore that will raise your credit score bit by bit until you are back to where you started from or above.
The Simplest First, A Bank Account
A good way to get a foothold on your finances and credit is to open a bank account. Opening a new bank account won’t raise your score, as the information isn’t used on your credit report. However, you will need to setup a good relationship with a bank to set the stage for strategies to come in the future. A great account to set up is a checking account. Once you do set one up, make certain to use it very responsibly. Responsible use includes the usual things like using your check card, and writing checks. Just make sure not to overdraft! The bank likes to see that you can handle cash responsibly, and then when you get to the point where you are ready to take out a loan, they will feel that you can handle a loan and will be more likely to grant you one.
Be Timely With Your Payments To Utility Companies
A great way to get your credit rating to look good again is to make sure to pay your bills on time. Bills such as those from the telephone company and the electric company must be paid on time to maintain a good rating. You may have had to pay a deposit to get these services started in the first place if you had poor credit when you set up these accounts. It is of vital importance now that you have these accounts set up that you pay them on time monthly. The security deposit you may have had to pay must not be looked at as a “savings account” meaning you can skip a month here and there. A credit rating will be affected by even one missed payment. The benefits you will receive from paying bills on time will be very evident.
Obtain A Credit Card
A credit card can still be obtained even with poor credit. It’s very interesting that even after filing bankruptcy, a person will likely receive a number of credit card offers in the mail. Usually these offers come from companies that specialize in handling poor credit clients. But say your credit is really poor; you may not be able to get one of these credit cards. If you happen to fall into this category, You will have to look into getting a secured card.
With this type of card, you technically are not being extended any credit. The setup here is that you establish an account that you fund yourself. The amount that you have in this account is the limit that you have to spend. A secured card – used responsibly – will be a big boost to your credit rating, and may keep you from getting into credit card trouble again. And you needn’t worry what people may think of you; a secured card appears and swipes just like a normal charge card.
Be aware that a secured card won’t have all the perks that a traditional card may have. Most secured cards actually have no perks. This will get you into the habit of knowing that a credit card is basically for paying for things without having to have cash. In addition, you can use a secured card to secure a hotel or airline reservation. Secured cards do come at a price though, fees and charges can add up. But if you are looking to rebuild your credit, you must be prepared to sacrifice a bit.