There are many reasons why people have credit problems. Sometimes, bad credit is an after-effect of a situation beyond a person’s control such as unexpected loss of job, illness, or family problems. Having bad credit will make it hard for you to obtain a loan or credit with a good interest rate. Sometimes it will make it so the banks won’t take the risk of lending money based on your credit score. Today, even prospective employers will pull credit as a part of the hiring process. If you find yourself saddled with a low credit score, don’t despair!
By adopting good money management skills and taking steps to rectify the situation, you can improve your bad credit in as little as 6 months!
How To Use A Subprime Credit Card To Improve Your Bad Credit
A subprime credit card is one made to service consumers who have less than perfect credit. You can use these credit cards as a tool to improve a bad credit situation.
If this sounds like a strange advice, check out the following tips on how you can use a credit card to pull your credit together.
Pay off your debts first.
If its possible, we tell our clients to pay down as much debt as possible before applying for a credit card. now this isn’t necessary to get a subprime card, but sometimes this simple act improves your score so much that you can apply for a regular credit card. Also since you will be opening a new credit card account. Its best to paydown as much debt as possible to make sure you can make on time monthly payments. Prioritize your debts and focus on paying one debt at a time.
For example, if you are behind your mortgage payments, then obviously this is the most important account that needs your attention. You could end up losing your home if you fail to take action on time. If you have other secured debts, you should definitely do your best to pay these debts first to save the collateral you submitted.
If you have credit card debts, check which one has the highest interest rate and pay it off completely. You can also pay off the credit card with the lowest balance. The goal is to eliminate at least one account from your list of debts. Then you can work your way from one credit card account to the next. As you try to pay off each credit card, don’t forget to make minimum payments on the other cards to avoid incurring penalty charges.
Negotiate with your creditors.
Don’t be afraid to speak with your creditors and ask for modifications in your current repayment terms. For instance, you can request for the late fees to be waived or for the interest rate to be reduced. With regards to your loan, ask your creditor if the repayment period can be extended so you can enjoy lower monthly payments. If you are in a financial crisis, negotiating with your creditors can be your lifeline to recover from bad debt.
Rebuild your damage credit.
As soon as you paid your debts, you should begin working on improvement of your credit. You can do this by using your credit lines again. This time, use your credit card with caution. Regular activity is important to show creditors that you are capable of managing debt and credit. Use your credit card at least once a month, making sure that you can afford to pay off your full balance. It does not need to be a big purchase. What’s more important is that you can pay it back on time.
Be patient and monitor your progress.
Repairing bad credit does take time. It depends on how bad the damage before you can regain good credit once again. The important thing is that you are taking a positive step forward. Keep track of your improvement. Check your report after six months and make sure that your credit card payments and loan payments are accurately reported to the three major credit bureaus.