The most overlooked aspect of credit repair

Repairing your credit isn’t just about removing negative items.  You need to not only remove the negative, but you need to ADD the positive.   In this post, we present tips on how to use  poor credit credit cards to improve your credit score.

Secured credit card or Unsecured credit card

With so many poor credit credit cards on the market, the easiest way to differentiate them is by whether they are a secured credit card or an unsecured credit card.  Secured credit cards tend to have lower fees associated with them, but require a security deposit up front.  While unsecured credit cards can have much larger fees associated with them, but there is no security deposit due.   Most credit repair companies suggest you start off with a secured credit card. (Learn more about secured credit cards here)

Watch the fees and interest rate.

There are numerous choices of credit cards for bad credit in the marketplace. To make payment easier, you should choose the one with the lowest interest rate and minimal set of fees. Since you are trying to repair your credit you need to make sure it will report to at least 1 credit reporting agency.

Need a poor credit credit card? Click here for unsecured credit card offers from lenders who will approve people with bad credit!

Pay on time.

Pay on time!  This is your second chance to build a good credit score. The best way to do this is to set up automatic payments to the credit card companies.  DON’T wait for the statement to come in!  Some companies send out their statements 2 weeks before the due date!

Which means it gets to you sometimes with only 7 days to pay.  As soon as you get your card, note the due date and make sure you set your payment to leave your bank account with plenty of time for it to reach the credit card company and get processed. Use your credit card regularly.

Use your card wisely

You should use your card at least once each month if you are trying to rebuild credit.  You need to show creditors that you are now a responsible payer.  Having a card and not using it will not show how you are currently paying your bills.   Just don’t go overboard!  You want to be able to pay your card off at the end of the month and avoid paying interest on the money.

Pay in full.

Yes you need to use your credit card in order to build credit.  But that doesn’t mean you need to abuse it!

Some credit repair consultants say you should carry a balance from time to time.  Since credit card companies make their money from the interest they charge.  Supposedly that will make them look on your account more favorably.  I don’t know if if that’s true or not.  But I due recommend that you get in the habit of paying your credit cards off each month.

 Avoid maxing out your credit

30% of your credit score is based on your available credit.  When calculating your credit score  they look at the amount of credit issued vs amount available for use.  So if you max out your cards, your score will be lower.  

TIP: When we are working with a client on a business loan and they have a low score.  We have them either pay it off as much as possible for a quick credit boost.  Or we ask them to call their credit card companies and ask for a credit limit INCREASE so that it doesn’t look like they have maxed out their cards!

Track your progress.

Join on of the credit monitoring services and keep track of your progress.  If you are part of our credit repair clients, credit monitoring is included. You should start seeing a significant  improvement to your credit score in 6 months if you are cleaning and building your credit diligently.  Sooner for people with minor credit problems.

Upgrade to an unsecured card.

If you choose a secured credit card to start building your credit (and secured credit cards are one of the best ways to build credit)  Then within a year or 2 of good payments  the secured credit card issuer should make your credit card unsecured.    And return your security deposit to you.

As you can see, poor credit credit cards can do a lot to improve your credit score.  This is your second chance to build a strong credit profile.