How Can I Use One to Repair My Credit? – Credit Book
When times get tough, many people turn to retail therapy to help lift their spirits. With their “buy now, pay later” system, credit cards provide a guiltless form of purchasing power, even when you don’t necessarily have the cash to back that power up. Unfortunately, if you aren’t educated about the ways in which your spending habits affect your credit rating, you could be paying for a lot more than a quick emotional high. As more and more people have used credit cards unwisely, the cards have developed a somewhat bad reputation, but it doesn’t have to be that way.
Now if your file is damaged, you have to find a way to restore and take it to another level. After figuring out what caused your bad credit, you will be able to put together a step by step plan to restore it and start getting approved for things you want. Once you finish repairing your credit, you will see why it’s so important to keep it at its new level.
Never forget the 30/30 rule. Your outstanding debt accounts for 30% of your credit score, and you should never charge more than 30% of your credit limit on your card. If you go above that, your score will drop.
Time is on your side. The most common practice in most credit repair projects is to challenge your negative credit report entries with the credit bureaus or original creditors in hopes that they may be unverifiable and therefore qualified for removal from your credit report. The more time that has passed, the more likely those negative items are to be unverifiable. Additionally, if the attempt at removal fails, the next step is typically to negotiate those debts down to a payoff that is less than what you owe. In the world of collections, a debt is worth less and less as time passes. The longer a debt has been on the books, the less a collector is willing to accept to adjust the debt to a “paid” status therefore in both cases, time is definitely on your side.
Next, look in your book for techniques on how to inspect and dispute your report. Make sure you inspect the file for errors like wrong accounts, and accounts that are not yours. Your next step would be to dispute the items that you think that are incorrect. You do this by making a list of the accounts that you do not agree within the report. Then you can begin the repair process.
So… credit card debt is a bad thing, but you need to maintain a certain amount on your cards to improve your credit score. The question, then, is this. What exactly should you be spending your money on? How can you use your credit cards to build good credit?
The pre paid card is much like a checking account debit card which charges your account as soon as you make purchases and once that happens the money is gone. With a secured credit card, your charges are applied against your credit line (equal to or slightly greater than the amount of your initial deposit), but are not billed to you until the end of the month, much like a standard credit card. Once you receive that end of month bill, you can either pay off the total amount or make the minimum payment required by the card issuer. In the case of a secured credit card, those payments are usually reported to the credit bureaus and if made on time, will contribute to the improvement of your credit score. This is a very important distinction when working on rebuilding your credit.
Credit cards should be used to increase your quality of life or your wealth, not simply to put yourself deeper in debt. The next time you’re going to charge something, consider whether or not that purchase is going to create a state of abundance for you. This type of self-control will not only help you improve your credit rating, but it will also help you make better long-term financial decisions.
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