Step 1: Get a Secured Credit Card to Rebuild Credit
FOUR STEPS to REBUILD your credit and or HOW to CREATE YOUR CREDIT from scratch
Step 1: Get a secured card
STEP 1: Get a secured card
So you graduated from a Debt Settlement program and now you need to rebuild your credit. A secured credit card is a great way to start.
Building credit takes time and it’s good to have multiple sources or types of debt and or creditors in order to build your credit. So how do you start when you have no credit?
The 1st step is to get a secured card: You need to start by having a creditor that reports good credit about you first. In fact you may want to get a couple of these cards to get the ball rolling. (See below)
You may have noticed that when you applied for credit and got denied or rejected, that rejection gets recorded on your credit report, so be careful not to get too many of these. The credit reporting agency will see you as a “credit risk” if you are constantly applying for credit while receiving rejection letters. This is another reason why a secured card is great way to start, because there is “No Rejection”.
How does it work? Well, with a secured card they typically require that you put money into a bank account or make a deposit that is equal to your credit limit. This deposit will earn interest and the card is thus secured in the event that you can’t make a payment, hence the name, “secured card”. So if you can’t make a payment or miss a payment the bank will use the monies you have deposited as the payment. Once you get your secured card you should of course never be late (this will defeat the whole purpose).
It’s also advised that you apply for a secured card that will report to all three credit bureaus. (Transunion, Equifax and Experian). This is very important, remember the whole reason you’re doing this is to build credit report while establishing a good credit history.
Let’s say your credit limit is $400, it’s also advised that you never owe more than 35% of the limit on the card, so in this case $400 * 35% = $140. This should be the maximum amount you should ever have on this card. You can always increase your limit by increasing your deposit with secured card company. Carry that balance for few months, while paying the minimum payment, yes the interest may be high, however this will show that your making your payments on time. Then you can payoff off the balance and repeat the process. Do this with at least two secured cards and then follow Step 2. (See below)
Follow the above steps for at least 6 months, while also establishing a second type of revolving debt (See step 2).
Below is list of secured credit cards to rebuild credit