Rebuild Credit Rating - Credit Cards

You can use a credit card to help rebuild your credit score. This card will help you build a positive payment history and will improve your ratio of available credit to debt; both these factors are heavily weighed in your credit score.

This is how you will build positive credit to your damaged score. Unfortunately because of your low score you will have to pay higher interest rates.

It is still important to remove bad credit items from your credit report. However it has been learned that after a bad credit item ages 4 years it will damage your score much less.

With your card you are going to have to pay an annual fee and around 19% APR. This is called a sub prime credit card because it is designed for individuals with a damaged credit history.

Your card will have a credit limit around $300. The other alternative is to get a secured credit card.

With a secured card you will have to put an initial deposit down and how ever much your deposit is that will be your available credit. The benefit of a secured card is that they approve everyone.

Both these types of cards offer instant approval. Before you apply for any card double check and make sure that they report to all three credit bureaus.

In addition your credit will get the most benefit if you can keep your monthly balance at 10% of your credit limit. For example if your credit limit is $300 then you want your monthly balance to be $30.

This will help because it shows; you use your credit, and use it responsibly. In addition having available credit will increase your available credit to debt ratio, this shows the bureaus that you are not in over your head.

The other alternative for a credit card is a shopping card. This card is only accepted through a designated catalog or through a website. These cards often only report to one credit bureau and have large fees.

A prepaid debit card is another option. We suggest this option to individuals in chexsystems because it will work just like a bank account.

In sum we suggest a sub prime unsecured credit card. This will give your credit score the most benefit because it will increase your ratio of available credit to debt and help you create a positive payment history.