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Starting Over With Your Credit History

Starting Over With Your Credit History

Make no mistake – one of the hardest things to do is rebuild one’s credit history after a bankruptcy or a few bad economic years. But it can be done, provided a bit of patience and consumer credit card know how is part of the mix. Here, we have several ideas that will get you back on the right path along with a few credit card offers that will serve you and your efforts well.

The Most Important Considerations

There is no shortage of credit repair ripoff radicals who will promise you the moon and stars and will leave you broke. It’s crucial not to get taken in by these folks; otherwise, you risk further financial problems. There simply are no quick fixes or tricks to bypass the legalities.

It simply takes time and a commitment on your part. The only financial sacrifice you should be making during the process is the higher APR rates you’ll likely face until you’ve reestablished your credit. If you’re paying someone else for their “cure all,” you’re throwing your money away.

The Seven Year Rule

It’s true that the majority of our credit decisions – good or bad – have a shelf life of at least seven years. Even if you’ve not filed bankruptcy and have paid delinquent accounts off, would-be creditors will likely see that seven years from the date of the last activity. It’s important to keep in mind that if a delinquent account has been on your report for a couple of years and then you suddenly pay it off, you’re not looking at seven years from the time it hit your credit report – you’re looking at seven years from the date of that final payment. That’s not to dissuade you from paying off older accounts, it’s just the more you know, the better prepared you are as you begin the process of picking up the pieces.

You Are Not Alone

Everyone endures tough financial days at some point – no one – not even Donald Trump is immune to those lean days. In fact, in 2010 there were close to 1.6 million bankruptcies filed in the United States. That’s almost a 14% increase from 2009 and almost a 17% increase fro 2006*. It’s difficult to talk about in social circles; no one likes to discuss their financial problems, but you should know, there’s a good chance you have friends and neighbors who can relate your struggles.

What You Can Do Now

A secured credit card is likely going to be your best avenue at this point in the game. This works for a few reasons, including the fact that a secured credit card means positive history is being built for your overall credit. A secured credit card requires you put up the collateral in the form of cash and usually in a savings account. It protects the bank as you begin to re-establish new credit. Your goal at this point is to not use more than about 60% of your available credit, pay your statement early and establish a pattern of usage and then payment. It’s a slow dance, granted, but this is the one sure way to pick up those financial pieces that have cost you lost sleep.

A Recommendation or Two

Not sure which bad credit credit card to choose? There are many to select from, but we have a few suggestions worthy of your consideration. The AccountNow Vantage Debit MasterCard offers free bill pay services for your first seven transactions each month. There are no interest rates, no annual fee and because it’s a prepaid credit card, you don’t have the customary credit checks. Not only that, but with this program, you can be sure of consistent credit reporting – which is a must for rebuilding your credit.

We also like the READYdebit Visa Prepaid credit card. It offers many of the benefits as the AccountNow MasterCard, but also allows for free direct deposits from your employer. It too reports to all three credit bureaus and no worries about interest rates or annual fees.

Either of these credit card offers will more than suit your needs. Keep in mind with each payment made on time, you’re that much closer to reclaiming that sense of independence that a solid credit rating offers.

* Source: Administrative Office of the U.S. Courts on behalf of the Federal Judiciary.

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