A Tip To Rebuild Good Credit

November 16, 2007 · Filed Under · 3 Comments 

Secured Credit CardAs I mentioned in an earlier post, a few years ago I was able to come out from under a huge amount of credit card debt. But my credit was shot, I was 120 days late on a couple cards and did a one-time ”payoff” payment on a couple others for less than the original balance. All of which shot my credit score to pieces. So when I started to try and rebuild my credit and change my spending habits I discovered something called a Secured Credit Card through my bank, Bank of America. It was just what the doctor ordered. For those of you unfamiliar with these types of credit cards, let me explain what they are and how they helped me. To get my Secured Credit Card I deposited money into a new savings account at BofA. Typically, the minimum deposit required ranges from $250 to $500. I deposited $500, and the money was locked in my new savings account for a one year period and the bank gave me a credit card with a credit limit of $500. The bank then used the $500 if I failed to meet my card obligations. The cool thing is that I earned interest on the $500 like a normal savings account. Once the 1 year period expired, my card became a regular unsecured credit card and I was free to do whatever I wished with the $500.

Benefits:

  • Even though the card is secured, it still shows as a regular credit card on your credit report and helps to rebuild your credit history.
  • The small credit limit helped to control any overspending and frivolous purchases.

Things To Look Out For:

  • Always pay at least the minimum on your secured credit card. Any missed payment or bounced payment check will really set you back on the road to rebuilding your credit history.
  • Find an issuer that reports often to one of the major credit reporting agencies.
  • Look for an issuer with a small annual fee. BofA charged me a $29 annual fee.

My secured credit card really worked great for my situation. I paid it off every month, and I still have the original account and it is my main credit card. One thing I don’t like is they keep raising my credit limit, it is now at $5000. I will never need a credit limit that high.

Please Pass This Post Along and Comment Below!
  • Digg
  • del.icio.us
  • Furl
  • Reddit
  • StumbleUpon
  • Technorati
  • YahooMyWeb

If you enjoyed this post, make sure you subscribe to my RSS feed!

Comments

3 Responses to “A Tip To Rebuild Good Credit”

  1. barry b. on November 17th, 2007 7:19 am

    This seems like a good idea for rebuilding credit. I’ve been paying off credit card debt for 16 months now – gone from 22,000 to 7,000 in that time. My life has really changed – and my spending habits, I’m living within my means. However, I don’t plan on using credit again period – I know this sounds strange, but I believe you can’t build wealth while your in debt. So for now at least – i’m done with it.

  2. Kyle on November 17th, 2007 1:19 pm

    Hi Barry, That does not sound strange at all. I know many folks that don’t use CC’s at all and say they are better off for it! Thanks for stopping by and leaving a comment. And best of luck in getting debt free, you have already come a long way!

  3. Unsecured Loans Now on December 8th, 2007 8:52 am

    It can be hard to get a hold of credit cards with a history of bad credit or a low credit score but there are lending companies that provide such services. Online financial services of this kind seem ubiquitous nowadays, so credit cards are much more accessible. Thanks for the info!

Leave a Reply




Bad Behavior has blocked 954 access attempts in the last 7 days.