There are ups and downs in life, and there are ups and downs in your credit history. Often people feel more embarrassed about telling their credit scores over their weight, but it is nothing to be judged upon.
A good credit score might let you have any type of credit at an attractive interest rate but there is always a silver lining for people with an average to low credit scores. A low credit score isn’t something which is irreversible. You can always work on your credit score and help it improve by exercising control and following some credit hacks and tricks.
Look for cards that will give you a high credit limit
By increasing your credit limit you are decreasing your credit utilization ratio. If your current creditors are unwilling to increase your credit limit. Then a good alternative is to get yourself a guaranteed approval credit card or merchandise card (a.k.a catalog cards). Often times these cards will come with a credit limit of $1000 and above!
What is a guaranteed approval credit card
These cards are called “guaranteed approval” because most of the issuers DO NOT pull your credit in order to approve you. You are probably asking yourself why would they approve you, AND give you a high credit limit without checking your credit. Unheard of! The reasoning is simple, it is tied to a specific catalog and can only be used to buy goods From that catalog.
These catalogs tend to have a wide variety of merchandise. From home goods to electronics. Some even have laptops. And you can use this sort of card to buy things out of that catalog. You will NOT be able to use it anywhere else.
How can you rebuild your credit using one of these cards?
You need to make sure the card will be reported to the credit reporting agencies. Some of them will submit to all 3. Some to 1 or 2 only. Some even to only 1. But there are also some that do not report at all, or they will charge you a monthly fee to report your activity.
Practice good credit habits
Now that you have a high limit card, you now need to show that you can handle it. Your regular credit card company may have declined your credit limit increase because they were afraid you were not capable of handling a large credit line.
A larger credit limit means a bigger chance that you won’t pay. But buy using a merchandise card wisely, you can show your creditors you can handle a large line of credit. Usually 6 months to 1 year after obtaining one of these cards, you should call your regular credit card company and again ask for a credit limit increase. If you have been making on time payments, no delinquencies or new collections. They may say yes.
Remember your credit score will go up when you keep your credit utilization levels low. So if you use a card, make it a point to pay it off to a $0 balance. If that’s not possible, then remember you want to be using less than 30% of your credit limit. Once you go over 30% you are starting to harm your score again!
What’s the catch!
These cards are great for people to rebuild their credit, but the merchandise in the catalogs tend to be at a higher price then what you can buy online or at your local store. But if you use these cards wisely, the benefit of rebuilding your credit can outweigh the high price of the items.
In a nutshell, improving your credit score is not a hard nut to crack if you use these cards sensibly to improve your credit. Remember your objective is to increase your credit score. Not buy everything you have wanted for the last few years but couldn’t get approved for!