Credit Score Repair

Credit card offers can save your credit rating

Common sense – two words most of us fail to pay attention to as they apply to a credit score. Most people don’t even realize how important their credit score is to their daily lives. You need a good credit score to get a new car, a new house, electricity for that house, and even a new job. You also need good credit to get a Visa, MasterCard, American Express or Diners Club. But then, when it’s time to start looking for that new car, house or Platinum Visa...BAM...you get blindsided with your poor credit score.

All of the hassle you are now facing could have been avoided with some commonsensical advice that most of our parents and grandparents taught us years ago. But fret not. There are steps you can take to correct the mistake.

To begin with, you need to know where you stand. Get a look at your credit report and find out where on this escalating scale of financial standing you fall. Most will fall into one of four categories: excellent credit, good credit, far credit or no credit. If you don’t have a credit card, get one. It’s one of the best ways to begin the rebuilding process.

There are numerous credit card offers available. They fall into one of two categories: unsecured credit card and secured credit card.

The first option, unsecured credit card, means the credit card company completely trusts you to pay your bills on time...so do it. Obtaining a credit card is easy. Keeping it is easy also, as long as you pay your bill on time. The second method for obtaining a credit card is the secured credit card. This is the safest in the beginning for most people.

The credit card company usually asks you to put some money in a savings account to be used as collateral if you don’t pay your bill. But this is just the first step on a long road to good credit rating utopia. Follow these steps and repairing and maintaining your credit score will be easier than you could imagine.

Step 1: Pay your bills on time. This may sound simple, but it’s easy to fall quickly into the trap of “NOT” paying your bills in a timely fashion. Late and non payment of your bills is the number-one item most companies report to the credit agencies. To alleviate this quagmire of late fees on top of late fees, consider using the automatic payment features that most credit card companies offer.

If you are nervous to allow the credit card company to access your bank account every month to grab their 30 pieces of silver, sign up for their email notification feature. Most will send you an email anywhere from 7-to-10 days before the bill is due. If you do this regularly, you will quickly build up a good history of paying your bills on time. And in the world of credit, your reputation is gold.

Step 2: You don’t need 20 cards. Limit yourself to just a few. After you get your first few cards expect your mailbox to be bombarded with credit card offers. Look at all of them and choose the best credit card offers based on interest rates, cash back features and other variables. And avoid the ever popular “Balance transfer credit card offers.” You just end up robbing Peter to pay Paul. It can get very tempting to accept every credit card offer you get.

You will start thinking to yourself, “The more credit cards I have, the better my credit score.” Nothing could be further from the truth. The more credit cards you have the worse your debt-to-ratio rating. And thus, the less appealing you are in your future credit history. Keep the cards few and the bills low. But again, pay them all on time.

Step 3: Limit the amount of credit you use. Just because you have the credit, doesn’t mean you have to use it. Keep your total debt between 30 and 60 percent of what you have available. Avoid maxing out your credit cards. When you max out your cards, you are showing potential creditors that you are not using your available credit wisely. This can come back to haunt you later, even though you’ve paid all of your bills on time.

Step 4: Limit the number of inquiries into your credit history. Limiting the number of times potential creditors look at your credit history is not always easy. A lot of employers are making this a necessary step before hiring any new employees. When you call the electric or cable companies, they look at your credit history. But you can limit the number of inquires simply by not applying for every credit card offer that comes down the pike.

Step 5: Review your credit report at least once a year. After you have repaired your credit report, now it’s time to maintain your new good standing. You know you are paying your bills on time. You have limited the number of inquiries into your credit history. You have even managed to keep your available credit at a reasonable rate. But sometimes the credit card companies make mistakes. If Suzie bill collector fails to file your payment on time, even though it’s been sitting on her desk for a week, you suddenly have a late payment to deal with. Periodically checking your credit report can help alleviate some of these mistakes that aren’t your own. It also lets the credit card companies know you are staying on top of them.

But other than staying in the good graces of the credit gods, there’s another reason for keeping your credit score. With the overabundance of credit card offers traveling though cyberspace and snail mail, identity theft is an ever growing problem. You can have your identity stolen, abused and discarded in a matter of months. By checking your credit report annually and controlling your spending, you can help alleviate this threat against one of your most powerful tools...your credit score.

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