When it comes to getting a credit card, qualifying is actually one of the easiest parts of the process.
Establishing a positive credit record, however, requires dedication and patience.
Whether you are new to credit or are trying to “clean up” that bad credit to reestablish a favorable record, you may encounter some frustration. You must have and use credit to create a credit history, yet many financial institutions are reluctant to extend credit to someone without an established record. But don’t despair – there are several good remedies for both situations.
Perhaps you may want to consider a Secured Credit Card?
With a secured credit card you are granted a line of credit based on the amount of cash deposit you put down. Usually secured credit cards come with annual fees and a higher interest rate. However at Tropical Financial we believe in helping you re-establish your credit in the easiest way possible. That’s why we have no annual fees, no balance transfer fees and no over-limit fees. So you’re going to get back on track without being nickeled and dimed.
Read more about managing your debt with Breaking Up with Debt.
You can re-build with a retailer’s credit card as well.
Consider a local retailer’s credit card. Their criteria is often less rigorous than larger credit issuers. Be sure they subscribe to the major credit reporting agencies though – if not, you won’t be establishing a credit history. Remember, do not over charge, make decent purchases within your budget and pay back the card on time to minimize your risk of paying high interest fees.
Getting a co-signer can help establish your credit as well.
Having someone with a positive credit record co-sign an account for you. This requires a great deal of trust on the part of the co-signer – if you fail to pay, he or she is responsible. You could end up jeopardizing a relationship as well as a credit record. But, I have a strong credit history support one that is recovering is the best way to start fresh. This is more common among partners, but could work with anyone you trust.
Review your credit report annually.
Finally, if you have damaged credit, you might need to rectify the past as you’re building your future. Paying old debts and correcting errors on your credit report as soon as possible might be the way to go. Everyone is entitled to a free credit report from all three major credit bureau. Checkout Annual Credit Report.com to get your reports annually.
Pay off Your Debts
Once you have a credit line, establish a good history by using it responsibly. Keep balances low, always pay on time, don’t pursue unnecessary credit, and stick with a few good credit instruments of various types.
Whether you have no credit or bad credit, it is possible to up that credit score but it is going to take time. It’s important that you are patient with the process and that you follow through with the process. Start small and take your time. Create a financial plan to help you pay off debt if bad credit seems to be the issue. And if you’re new to the world of credit, start slow, don’t get in over your head.
To learn more about down downsizing your debt and imporving your credit, read TFCU's Your Credit Report Guide below.