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Tips to rebuilding your credit through pre-paid credit cards

By On April 17, 2012 Under Uncategorized

Many people find themselves in the position of having bad credit. The reasons may vary from the economy, job loss which caused you to rack up credit card debt just to get by, or having no credit to begin with. Having no credit or a low credit score can prevent one from getting a car loan, mortgage, a credit card, line of credit, personal loan or even a decent job as many companies these days perform credit checks. If you are in this position you need a way to build your credit score up. Having a small balance credit card can repair or build credit. Regular monthly use of credit cards and paying the bill on time can establish, or re-establish ones credit. If you find yourself in a position to be denied a regular credit card, a secured credit card is a viable option, and serves the same purpose as a regular credit card.

Secured credit cards require a cash deposit, which is held by the credit card company as collateral. This collateral sets your credit limit. Many of these Secured Credit Cards if done through your bank will convert to a regular credit card after a period of time passes with positive credit standing with the issuer of the card. When your Secured Credit Card converts to a regular credit card, the issuer will return your deposit. It is rare that these deposits accrue interest on the deposit as the issuer takes this as part of their cost and risk of doing business with you. Some issuers will even reward you along the way for good payment by increasing your credit line without the need to add to the deposit. It is important that when the bank or credit card company you are dealing with increases the credit on your card, that you manage the new credit wisely, as one missed payment can severely set back your credit rating.

One should research the available secured credit cards and find one with the lowest fees and interest rates. When using a secured credit card to establish, or re-establish credit history, one needs to use the card monthly and pay off the bill on time. Using the card monthly will assure a regular pattern of credit use. Paying the credit card bill on time, every time, will assure your credit is posted positively to your credit report. Over time this will begin to increase your credit score.

While using a secured credit card to build credit, it would be in ones best interest to pay off any old debts that remain on your credit report. It also helps to pull your credit report every couple months to make sure the secured credit card is posting your positive credit to your credit report. Mistakes happen and some users of secured credit cards have reported their transactions not reflecting on their credit report. Should this happen to you simply call your credit card and update them on the situation, and ask them to report your credit history with the 3 major credit reporting agencies.

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