The Secured and Damaged Credit

The Secured and Damaged Credit

Most people end up with a damaged credit when they
experience a financial difficulty. Having a damaged
credit can make it hard for you to obtain a new one.
Those credit mistakes you made in the past can be
nearly impossible to live with, especially when your
new creditors and lenders are reluctant to provide you
with a second chance. And so, in order to reestablish
your credit, but cannot obtain a credit card, you only
need to get a secured credit card.

The Secured Credit Card

The secured credit card is not that different from the
regular credit card. It operates just like the usual
credit card but it requires you, the cardholder, to
make a deposit against the credit limit of the
account. The deposit is utilized by the creditor as a
security in case you default on your payments.

Usually, secured credit cards have a credit limit of
50% to 100% of the deposit you make. For instance, if
you make a $1000 deposit for the secured credit card,
the credit limit will be between $500 and $1000.

More so, these kinds of credit cards normally have
fees that regular credit cards do not have. These fees
will include processing fees, application fees, and
annual fees. However, always be on the lookout for
those cards with high fees since they can
significantly decrease your deposit and eventually
your credit limit.

Taking Advantage of the Secured Credit

Damaged credit is the effect of having poor payment
habits, most of the time. If you cannot obtain credit
through traditional methods, secured credit can
greatly help you demonstrate improved habits in your
payments. Since you cannot prove a renewed capability
to make payments on time until obtaining a new credit
card, having a secured credit card is a big help.

However, before applying for one, you must guarantee
that the creditor reports to all the three major
bureaus for credit. Otherwise, the card would not be
beneficial in the issue of reestablishing your credit
for the reason that future creditors would not have a
process of looking at the history of your payment.
Additionally, it would not be incorporated in your
credit score or in your credit report.

If your application gets approved, always keep in mind
that your sole purpose for the card is to rebuild your
damaged credit and eventually create a positive credit
history. It is important not to use the card to incur
debt and instead, use the card to buy small things
that you can actually pay full in a month. Moreover,
it is important not to charge any item that you cannot
afford to pay on the card.

Managing your secured credit card and developing good
habits in payment can help you move into an unsecured
credit card. There are several credit card companies
that allow a consumer to convert to an unsecured
credit card after the course of one to two years of
timely payments. Even though you cannot change your
secured credit card, you can still submit an
application for an unsecured one with another company.

Remember not to repeatedly apply for credit cards
after you have been denied of an application; this
would only make you look desperate. What you can do
instead is to continue to make your payments on time
on your secured credit card and apply again after the
span of six months.

The Basics of Credit Repair

The Basics of Credit Repair

By having a credit, you are using someone else’s money
as payment for your purchases. In addition, it also
indicates that you are swearing to repay the money to
the agency or person that loaned you the amount.

If you are applying for a loan, credit card or
mortgage, it is normal for the agency to check your
credit worthiness. This is essentially based on the
assessment of your credit history, thus helping them
determine the possible risks of the deal and decide
the terms of the loan. Positive assessment means good
financial background, which increases your chances of
applying a credit.

The Credit Repair

The process wherein consumers with poor credit
histories try to reestablish their worthiness is
called the credit repair. It involves procuring the
credit report from agencies and taking careful and
appropriate steps in addressing apparent issues,
including omissions, misreporting, misinterpretation
or other inaccuracies.

If there are any discrepancies found in the credit
report, the consumer is entitled to dispute the errors
that unjustly harm their financial healthiness and
credit worthiness. There are several laws and
regulations that are designed to guarantee fair and
legal undertaking of the credit report process. These
laws can be used to legally and formally start the
process of credit repair.

Every consumer is entitled to one copy of credit
report each year from each credit reporting agency.
Investigations with regards to the real nature of the
inaccuracies and errors are possible and necessary for
a successful credit repair.

What influences your purchasing power and eligibility
of availing any credit facilities in the future is
your credit record. You should keep in mind that a
good credit score can help in several purposes, such
as: mortgaging a home, buying a car or applying for a
job. On the other hand, a bad credit score can make
you vulnerable to exorbitant interest rates and
unnecessary loan terms from several companies. These
two facts are important in helping you understand why
maintaining a good credit score is vital.

How to Repair Your Credit

The process of credit repair can be achieved through
hard work and discipline. Easy methods, which can help
you get out of poor credit history, can be quite
tempting. However, these easy way outs can only lead
to further difficulties in the future especially if
they are done illegally.

In case your poor credit history is caused by
circumstances beyond your control, you can always
request for an upgrade in your credit rating to your
creditor. However, this can only be done if you were
able to make amends to your credit records after the
circumstances.

Creditors do not normally trust consumers who default
on their payments. This can pose a difficulty to you
in obtaining a new credit. However, once you are able
to demonstrate enduring stability in your income and
prompt patterns in your payments, the situation can
improve in the span of two to three years. This way,
even though there is a case of bankruptcy, you are
likely to be eligible for credit cards within two
years if the steady income is maintained.

Keep in mind that there are no quick fixes in
repairing your credit. By contacting credit bureaus,
creating your own corrections, budgeting and
consolidating your debts can improve your own score.