Some people don’t come face to face with their bad credit until they’re rejected for a loan. This is the worst time to discover less-than-perfect credit. Credit isn’t something you fix overnight, and a low score can postpone major purchases, such as a house and automobile.
Learning that you have bad credit doesn’t indicate the end of credit approvals, nor should you accept bad credit as your lot. With rejection after rejection, applying for another credit card might be the farthest thing from your mind. But don’t cast off credit cards so quickly. Apply for the right card and you can boost your personal score.
Know your options.
There is a trick to getting credit with a low credit score, and it’s all about applying for the right kind of accounts. There are credit cards for every credit limit. Some people don’t recognize the distinction and mistakenly think that all credit cards are the same. This type of thinking can result in a lot of rejections and disappointment.
Some credit cards are designed specifically for people with excellent credit. If you apply for these accounts – and you have fair, bad or no credit – a rejection is inevitable. Doing your homework and knowing the best card options for your credit level gets your foot in the door. Practical credit cards for establishing or rebuilding scores include secured bank credit cards and unsecured bad credit credit cards.
Use your credit card regularly.
Using your credit card is essential to boosting your score. This doesn’t suggest going on frequent shopping sprees and maxing out your account. Moderation is important and you need to monitor your spending. Remember, your creditor reports your account activity to the bureaus each month. It’s these updates that give your score a boost.
Some people apply for a credit card and never use their account. But if there’s no account activity, there’s nothing to report, and credit scores remain the same. Pull out your credit card a few times each month and make small purchases. Give yourself a predetermine spending allowance. This keeps your account active, thus triggering regular updates.
Payment History/Amount Owed
Of all the factors that make up your credit score, your payment history and what you owe are the two biggest factors. Payment history makes up 35% of your score and balances make up 30% of your score. Responsible use demonstrated by paying on or before your due date and paying your balance in full each month can quickly increase your personal score.
Stick with a spending plan and only charge what you can afford to pay back each month. If it helps, leave your credit card at home, and only pull out the card for pre-planned purchases. Schedule text or email alerts for due dates, and register for online management to better track your spending and pay your bill online