Building your credit score after you have had credit problems is not as easy as one might think. In many ways, the entire system is very confusing to those who just want to live a simple life. However, your credit history can impact more than just the offers you get in the mail.
Your credit can impact employment options, personal relationships, and other areas of your life. Whether you are about to file bankruptcy, are just starting out, or have already filed bankruptcy, you can use some of these tips to help you build your credit score little by little.
Ask Creditors About Reporting
Not all creditors report to the credit bureaus. Some only do so if you fall behind on payments. That seems unfair, but it is the stark reality. Before you open a line of credit, ask the creditors if they report to the credit bureaus as well as how often and what they report.
If they don’t report on a regular basis, you may want to look elsewhere for a line of credit. Further, it’s important to be aware that financial products such as prepaid cards and debit cards do not typically report to credit bureaus, and therefore, cannot help increase your rating.
Pay Balances in Full
At one time, it was believed that you had to carry a balance in order to build your credit. However, carrying a balance from month to month can end up costing you as the interest rate accumulates. When you are repairing or building credit, you are often charged high interest rates, which make it even more important to avoid interest charges by paying your balance in full each month. These payments will still be reported to the bureaus, and you are still able to build your credit score—but you will also pay a lot less in interest.
Consider Secured Credit Cards
If you have had credit problems in the past or you have filed bankruptcy, it may take some time before you qualify for an unsecured credit card. In order to build your credit, however, you will need some form of credit to report to the credit bureaus.
Secured credit cards are often the best option for building credit until you qualify for other options. These cards typically require a security deposit which is held by the issuer in case you default. In the meantime, you get a credit card with a limit in the amount of the deposit to use as you would any card. Don’t worry—most secured cards report as regular cards and look like any other card.
For debt management assistance and help with bankruptcy questions from our lawyers, you can call (813) 940-5120) for a free initial consultation.
Please share this post online if you know someone who can use these simple tips for building or rebuilding his or her credit score.