1 - First, check your credit history. It is important to check your credit history and your credit score on a regular basis. This will let you know in which areas your credit rating is weak and needs improvement. You should check your credit report for mistakes. Companies occasionally report incorrect information. If you have a name that is similar to another person’s, it is possible that there credit history will end up in your report. You’ll want to have these mistakes corrected right away. When you look over your report, check for any accounts that you have not opened. This may be a sign of fraudulent activity. Report this to the credit agency.
Did you know that you can check your credit history for free? The three main credit bureaus are required to make your credit history available to you for free once per year. They have established a website for this purpose at www.annualcreditreport.com.
In addition, many experts recommend that you check your credit history more often so that you can find and correct mistakes more quickly. You can also check for fraudulent activity and identity theft. For a small charge, there are companies that will send you your credit history monthly or quarterly. Depending on the service offered, they will also give you your credit score and will tell you where you credit history needs improvement.
2- Consider a secured credit card. If do not qualify for a regular card, then you will need to apply for credit cards for people with bad credit. Usually this type of card is a secured credit card. What is a secured credit card? These cards require that you place money in a savings account equal to the credit limit that you want. Almost everyone can qualify for a secured credit card, regardless of one’s past credit history.
For example, if you want a $1000 credit limit on your credit card, then you may need to put $1000 into a savings account with the bank that is issuing your credit card. This gives the bank a ‘safety’ factor. If you are unable to pay your credit card bill, then the bank will use money from your savings account to pay your bill.
A secured credit card often has an annual fee and sometimes requires an application fee. Sometimes these fees are quite high. It pays to shop around for the best deal. Also, they cards usually carry a high interest rate. It is important to pay your bill off in full each month to avoid these high costs.
3 - Build your credit rating. Use your credit card often, for all your purchases. This will help build your credit rating.
4 - Always pay your bill on time each month. Your payment cannot ever be late, not even by one day. Not only will you have to pay a late fee, but missed or late payments will be reported to credit agencies. This, in turn, will lower your credit rating.
5 - After six months, apply for a regular credit card. Check your credit report periodically. When your credit rating rises, then it is time to apply for a card for those with good credit, i.e., an unsecured credit card with a better interest rate and no annual fee. If you have used a secured credit card for six months, and you have been making your payments for your card and all your other bills on time, then you may qualify for a regular or unsecure credit card. This will have the advantage of not requiring a security deposit. Interest rates will be lower. Look for a card with no annual fee. You will also save on any application or other fees that the secure card company may have been charging you.