Prepaid Credit Cards are very useful to its holders as you can buy anything at any time if you don’t have cash at that time. And you have a considerable amount of time limit to pay off the amount of cash thus owed from the bank.
However, sometimes we keep on using the credit card limitlessly and it results in a poor credit score. Therefore, it becomes difficult to use your credit card for the future. But there is no need to panic in such a situation; you can improve your bad credit by following some simple tips.
Copy of the credit reports
The foremost step towards the improvement of bad credit is to get a copy of the credit reports as you can work on your credits only if you have the list of accounts which are resulting in bad credit. You can get a copy of your credit card report from the relevant credit bureaus and know about the good and bad accounts. You can work on the bad accounts and keep others as it is.
Stop Avoiding The Problem And Address It
A large percentage of people living in debt make the mistake of pushing their situation out of their mind and continuing their bad spending cycle.
The first step is, to be honest with yourself about the bad decisions that you’ve made and to design a method of escape from your overwhelming debt issue. Find out exactly what your outstanding problems are by obtaining a copy of your credit report and prioritizing issues that need to be dealt with.
Clashing a credit report mistake
Your credit score is also affected by the unnecessary errors in the credit report of your credit card. It is because even sometimes the credit bureaus also make mistakes in making your credit card report. So you can get it rectified by writing to the credit bureaus or the creditor who has listed the account on your credit card report.
Look for Inaccuracies
Often times people will find inaccuracies in these reports. If that is the case, contact the credit reporting agency and find out what you need to do to protest the inaccurate report. In all cases, you are allowed to write them a letter stating that the information is inaccurate. This must be done within 30 days of receiving the report.
Look for Signs of Fraud
Unfortunately, others may be using your credit. Make sure that all the information on the report is things that should be there. Contact the credit reporting agency if you find someone else has been using your credit. They will help you file a fraud report.
They will also require a police report. It is a great idea to follow their procedures to have your credit frozen until you are ready to use it. Freezing your credit assures that only a person with the password can use the credit.
Keep away from new credit card purchases
The percentage amid your credit card balances and the credit limits is greatly affected by the fresh purchases made from the credit card. Therefore, if possible try to make payments for the fresh purchases in cash instead of using a credit card.
It is because if you will use credit card frequently, it will lead to piling up of credit payments on your credit report which in turn leads to a bad credit score.
Use Credit Lightly
Showing that you can use credit wisely will improve the score. Use your credit cards, but maintain low balances. If you are in a hurry to improve your credit score so that you can buy a home, pay off the cards with the highest amounts on them first.
Try to maintain no more on any card than 30 percent of the limit. Ten percent is seen as even better by the experts. Furthermore, remember that mortgage companies want to see no more than 12 percent of your gross income in debt when they look to loan you money for that house.
Don’t Spend On Credit
When someone is feeling as though their debt is overwhelming, it can be tempting to take out new debts to cover the cost of old ones. The truth is that the more debt you’re in, the higher the interest is going to be on new loans or credit cards.
This means that you’re effectively costing yourself more in interest fees, making it even harder to pay down debts in the long run. Avoid making any big purchases on credit, focus solely on eliminating your present money problems.
Once you have your debt paid off, you can start to use a credit card again, as long as you pay it off in full every month. This will show responsible spending and allow you to continue to raise your credit score. Until then, though, resist the temptation!
Paying off past due payments
Your credit card is affected greatly by the number and amount of past payments which are outstanding. Therefore, you must always pay-off your past payments in time to maintain a good credit report history. It will make easy for you to use a credit card for some important payments to be made in the future.
Staying away from new credit card application
As far as your old credit card payments are not cleared and the relevant credit card report is not attained, don’t apply for new credit card applications. It is because the inquiries for fresh credit card application will affect your current credit score to a great extent. The average credit age is lowered considerably due to the opening of the fresh credit card account.
Use An Old Card
That card that you have tucked away that you have had for years, but never used, use it now. The older the credit history is the better. So, if you have had a card for several years make sure and use it occasionally.
Keep accounts with balances open till they are completely cleared
You may think that closing the credit card account that has gone wrong is the best solution to your problem. But it is not true. Rather it will have a negative impact on your credit report. Therefore, first clear-off all the balance dues and then close the account as per your choice.
Ask for Forgiveness
If you have a credit card that has been reported for slow payment, but that you still use, write to the card issuer and ask that the slow payment be removed from your history. While some companies will and other companies will not, it never hurts to ask.
This way you can convert and Poor Credit Prepaid Cards account into a good one and keep on availing of its facilities in times of need.
Five Things You Can Do To Repair Your Credit
Having good credit is one of the best investments that the average person can make in the course of their working life. A good credit score can mean literally hundreds of thousands of dollars saved over a lifetime of buying large assets, such as cars and houses.
Below are five things that everyone can do in order to repair their credit legally and quickly.
1. Check for Mistakes
The three major credit rating agencies are known for making mistakes, especially applying for credit where it does not belong based on a similarly-spelled name or Social Security number.
If you use your credit score and it is lower than you think it should be, call the major credit rating agencies and make sure that they have not made a simple mistake.
2. Pay Off Your Credit Cards
Unsecured credit cards are one of the main drags on a long-term credit score. The second step in your credit repair efforts is to make sure that all retail credit cards are paid off, as well as all credit cards from commercial lenders, such as Visa and MasterCard.
The debts that you currently hold make up a good percentage of your credit score. If you work hard to make minimum payments, and more where you can, your credit rating will begin to reflect your effort.
Contact your creditors to discuss your situation and see what they can do for you. Many companies have programs designed for people who need help getting back on their feet.
Paying down large debts takes a long time. It requires self-control, planning, foresight, and persistence. You have to be sure that you are dedicated and patient. It’s never too late to turn your financial situation around and to start living the life that you deserve.
3. Make Sure You Are Within Time Limits When Others Check Your Credit
If you are in the market for a car or a house, you will likely have many people who want to check your credit score. However, if you do not adhere to the laws on time limits with these checks, your credit will be negatively affected with each check that someone else does.
However, if all the checks are done within a specified time period, it will only count as one check. This will not negatively affect your credit score.
4. Check Amount of Credit You Have Available and Do Not Close Too Many Credit Accounts
Contrary to popular belief, closing all your credit accounts does not necessarily increase your credit score. Usually, the average person should keep a few of their oldest credit accounts open to show that they have the ability to be lent to.
5. Pay Off All Expenditures
Pay off everything except for the mortgage loans that you may have, especially if it is a monthly expenditure such as a car payment. Mortgage loans are really the only thing that is really acceptable to have on your credit record if you are looking to maximize your credit score; everything else is a drag after you have established that you are actually credit worthy.
Very Risky Credit Moves You Should Avoid At All Cost
Being accepted into the world of credit is a huge honor and inauguration into the adult world. Most people are so happy when they receive their first credit line or credit card that they celebrate the event by spending irresponsibly.
In fact, there are several mistakes that credit holders sometimes make at the beginning that continue to hurt them for years. The following are 4 risky credit moves you should avoid at all costs:
Being Late on a Payment
Being late on a credit card or loan payment is one of the worst things a person can do in terms of their credit profile. Lenders report late payments to three major credit bureaus so that other lenders can use the information in their financial product application decisions.
Late payments are considered unacceptable and cause damage to the overall credit score of the cardholder. Even if the consumer only has enough money to pay a minimum payment, that will look better than a missed one on the overall credit report.
Applying for Too Much Credit
Some creditors get a little overzealous about having a credit card and they apply for way too many unnecessary additional cards. This can be problematic for multiple reasons. For one, every credit inquiry a person makes is a strike against his or her credit score.
Secondly, even if the person is approved for additional credit, new accounts go against the credit score from the beginning.
Finally, a multitude of credit applications makes the debtor look desperate, which is unattractive to potential lenders.
Using too Much of the Balances
Credit cards are not meant to be depleted of all available funds. They are supposed to provide a cushion and an emergency fund for the debtor. Anytime a consumer is using more than 50 percent of his or her available balances, their credit score is plummeting.
Credit scores are calculations of various factors, many of which are out of the individual applicant’s control. Available balance is one of the most heavily weighted factors within those numbers. Keep a close eye on your balance.
Not Realizing When Credit Repair is Necessary
Do you need credit repair? If you have been involved in any of the aforementioned credit damaging activities, the answer is most likely yes.
If your score is suffering horribly and you cannot seem to find your way out of the rut, you may want to seek the help of professionals. There are a number of actions you can take to repair your score and report to an outstanding level.
Another of the things you can do is seek credit counseling. Credit counselors can help to point you in the right direction for financial recovery.
Sometimes straightening up the score just takes some credit friendly practices and some good advice. These are serious financial issues that can affect other areas of your life, and you should always consult a professional when trying to resolve them.
The Credit Repair Game
Credit repair is a frequently misunderstood concept. Many people, desperate to improve their credit scores, turn to unscrupulous and misleading credit repair companies who take an upfront fee without providing anything of value. It pays to learn more about credit repair before paying anybody to do it for you.
We’ve all read about wealthy corporations who pay little in taxes. This is due to the fact that these large corporations secure high priced attorneys and accountants who know how to work within the system to maximize gains for their clients.
What is Credit Repair?
When it comes to credit repair, it’s a similar game. Credit “repair” isn’t really a repair at all. It isn’t like going to a mechanic and having them fix a broken brake line in your car. It’s a legal process, subject to its own variables and particular risks & rewards.
Technically, the Fair Credit Reporting Act of 1996 gives every U.S. Citizen the right to see and dispute any item on their credit report. If the credit bureaus fail to verify the information within a certain amount of time, they are legally bound to delete that item.
You can manually initiate such a dispute at any time. But how successful is the average person when making such a dispute on their own?
My Experience with Credit Repair
I hired a credit repair company in 2004 to help me with the dispute process. Over the months while I petitioned the various credit bureaus, I received a number of “brush off” letters as they are known.
Basically, the credit bureaus have their own automated process of trying to dissuade consumers from rigorously pursuing disputes. In many cases, people who draft dispute letters on their own, without legal counsel, are simply ignored.
I chose to retain the services of a reputable law firm, which assigned paralegals to work on my behalf. The cost was a low monthly fee, so I did not feel I was being taken advantage of. And within a few months of my first dispute letter, the first negative item was removed from my credit report. Over the next year, 11 negative items were removed from my credit report.
Is it possible that if I had mailed in my own dispute letters, without legal representation, that I would have had the same success?
Certainly. There are no guarantees in the credit repair game. But I felt that if large corporations and wealthy Americans benefit financially from securing the advice and representation of law professionals, I would do better with them on my side.
You certainly should not feel pressured into retaining the services of an attorney or credit repair company if you wish to repair your credit. But if your research and diligence show that the company or law firm has a good reputation and record of success, it is worth considering before you take on the credit bureaus on your own.
Why Bad Credit Loans Aren’t Always A Bad Idea
There will come a point in everybody’s life when they are in desperate need of money they do not have. Whether it is for mending a broken leg or mending a broken appliance, a sudden need for money often catches out those who have had previous financial difficulty.
If you have a poor credit rating or have some item in your past like arrears or bankruptcy that cause you to be unable to get a normal loan, then it may be worth looking at whether a ‘bad credit loan’ is for you.
What is a bad credit loan?
Simply put, bad credit loans are loans that can be given to people without a credit check – therefore enabling people with poor credit ratings to obtain loans. Obviously, this sounds too good to be true (and it is).
The downside to bad credit loans is that to secure themselves against people who they suspect may be unable to pay them back, the lenders often attach massive interest rates (sometimes upwards of ten times the average) to the loans. This means that they are more expensive and more difficult to pay back.
However, that is not to say that bad credit loans are always a bad idea. If you know what you’re getting into, plan ahead and think smart, you can use a bad credit loan to your advantage.
In what situations can bad credit loans work for me?
One clue in how to bad credit loans comes in the name of a certain type of ‘bad credit loan’ – the payday loan. The idea behind payday loans is that you borrow an amount equal to or less than your next paycheck (or two), meaning that you will definitely be able to pay the money back when you get paid.
It is a great option for those who need money fast but cannot lend it from a family member or get a payment advance from their work.
Have a look at how much you need and then compare it to when you will have the money to pay it back (don’t forget about interest). Once you’ve figured out the particulars, find a bad credit loan that offers the lowest interest rates and a flexible payment schedule and goes for it.
The key is to read all the small print, use a loan calculator to know exactly how much you will be paying back including interest, and making sure you stick to your repayment budget no matter what.
Are there alternatives to getting a bad credit loan?
The thing that forces hands into getting bad credit loans is that the desperate often have little other choices than to go for high-interest bad credit loans. However, if you’re looking for a loan with bad credit then there are some other options available to you.
One is to get a person with a good credit rating to co-sign the loan with you, and the other is to work on solving your bad credit rating before making your next loan attempt.