In today’s society, no one can overemphasize the importance of a good credit line. In fact, having a bad credit record is even worse than having no money at all. Without bad credit, it would be very difficult to get loans and do other transactions that would soon become necessary in the future such as applying for an apartment. However, people with bad credit need not sulk since they can still save themselves from their bad record through credit repair.

Credit repair may be done with a help of a financial adviser but it also helps to make some adjustments yourself. The best way of doing this is by proving that you are indeed capable of managing your finances. There are many ways of doing this, some of them are quite simple but they can definitely help mend a broken credit record.

Here are some important tips for credit repair:

1. Be sure to have your accounts settled on time. Whenever you get your bills, pay them immediately even way before the due date so you would not forget. Credit bureaus have high regard for payment history and they factor it in your credit score, taking up as much as 35% of the score. A good idea is to have your accounts registered on automatic transfer so that payments would immediately be made.

2. If you have past debts, pay them off, or at least show that you are trying to. If you do not have enough money to pay for everything, keep paying even in small installments. This will show that you are indeed responsible enough in trying to clear your accounts. Pay as much as your budget allows and pay regularly. Credit bureaus will notice these efforts, increasing your chances of getting a better score.

3. In case you do miss paying some accounts, try to catch up immediately. Not only do credit bureaus look at your missed payments, but they also check how long bills are kept unpaid. If you respond quickly, you can still show that you can indeed pay your debts even if it is a little later.

4. Register to vote. While it may not seem to be connected, registered voters do have better standings with credit bureaus. It can show that you are a responsible citizen as well as a responsible creditor.

5. Get hold of your own copy of your credit report. In the credit report, you would find a list of reasons you got a low score. Knowing this is necessary for credit repair and to avoid future mistakes.

6. Limit yourself to only one or two new credit accounts if you do intend to apply. Possibly, a bad-credit card and a bad-credit mortgage would be enough for you to manage easily. Getting several credit accounts at once may make you a hot object for credit bureaus.

7. Keep your old accounts, do not close them. Closing your old bad accounts will not erase them from your credit record. Pay them off and then keep them clean. Having old accounts can actually increase your average account age, which can help boost your credit rating and help repair your record.

Bad credit is not impossible to repair if you know for yourself the important steps to mend your broken record. Try these steps yourself and see your credit line improve.

In the world of financing, credit means the borrowing of certain resources from one party to another. The party which gives the resources is called the lender, while the other one that receives the resources is called the borrower. Since the borrower does not have to pay immediately, it then forms a debt which is then paid off according to the terms and conditions that have been agreed to by both parties.

Basically, both parties must meet halfway for a smooth flow of their financial credit. Sometimes problems occur along the way and so both parties end up seeing each other in serious legal proceedings. The resources which the lender can offer are mostly dependent on the investment that it has made for its company. Also, the credit limit given to a credit card applicant is dependent on the creditworthiness of the borrower.

What is Creditworthiness?

Creditworthiness generally gives an idea just how many resources the borrower is capable of acquiring as debt. It also tells if the borrower has sufficient means in order to pay it off. Most of the time, creditworthiness can be computed depending on the borrower’s regular income, credit history, and other sources of funds.

Remember that it is not really necessary that credit is automatically translated to monetary funds. Actually, at times credit can also be in the form of services, goods, and even properties. However, since credit is widely used in practically all sorts of transactions, it is simply as good as money. And with the existence of credit cards, people can acquire certain goods and services in return for an accumulated credit in their account. This gives them the capacity to buy different kinds of items in the market and pay for them at a later time. Such a thing is common to most people nowadays with the presence of consumer credit.

Consumer Credit

This type of credit is in the usual forms of credit cards, personal loans, and mortgages. Depending on the borrower’s creditworthiness, he is then given a credit line in which he can use in order to purchase goods, services, and properties in the exchange of later payment. The higher the creditworthiness of the borrower, the greater the chances he has of getting a much higher credit line from his lender.

However, though it may be an ideal set up especially for people who do not have the necessary outright resources, the backlog of credit is the additional value that is put together with the original debt. This additional value can come from service fees and interest rates. Some of these rates are already set out by the lender or the lending institution. However, at times they may be optional depending on the negotiation that may occur between the lender and the borrower. There may also be varying ways for these rates to be included in the debt. Some are included in the monthly payments while some can be in the form of annual percentage rates.

In general, besides gaining profit from the debt, lenders do require additional fees to ensure that the borrowers are honest and true in their responsibility of paying off their debt. At times these fees are even increased in the event that the borrower does not pay off his credit in the required time.

Basically, a normal credit card lets you purchase items today without paying for them outright. As you use your credit card in your transactions, the amount of the items that you have bought will be automatically added to your debt which you are required to pay for later months. It definitely becomes an advantage for you since you are given the assurance that you can pay for anything that you want without having to bring all the cash in your pockets. However, despite such an advantage a credit card also has its cons. If not used properly, a person holding a credit card can definitely accumulate so much debt without the proper resources to pay them off. When this happens, your credit history may go badly and things may even come to legal procedures.

Introduction of Prepaid Credit Cards

For these things to be prevented, a certain kind of credit card has already been issued by most banks. This is the prepaid credit card which generally works just like a normal credit card but the difference is that you do not accumulate any debt at all. This credit card works with the current bank account which means that the amount you want to spend is limited to the amount that is present within your account. If in case you have purchased a certain item in the market, the amount is then deducted from your bank account. This way, you do not accumulate any debt and you do not have to worry about credit card bills coming on every month. If for example, you have $2000 in your bank account, then you are only limited to use your prepaid credit card up to $2000 only. This means that a prepaid credit card also has no interest rates which can truly give you a headache if it is working on a normal credit card.

Being Conscious of Your Finances

Another benefit that comes with a prepaid credit card is the responsibility that you can create just by simply owning it. Having a prepaid credit card will make you conscious of your finances. This means that it totally prevents you from splurging too much money on unnecessary things. Since you are constantly reminded of the amount that you are limited to spend, it means that you can prioritize which items you need to buy and which ones can be bought at a later time. It will definitely work great on you especially if you want to control your overspending on expensive things. It will definitely help you become thriftier and more practical in buying items in the market.

No Additional Fees

Furthermore, you completely do not have to worry about additional fees such as service fees and interest rates that are present in a normal credit card. Since all the transactions that you make with a prepaid credit card are directly forwarded to your account, you do not have to worry about getting a credit card bill every month which only tells you just how much debt you currently have. Since a prepaid credit card is a lot safer than owning a normal one, then you are sure that you can have a financial status that is free from debt or any bad credit record. As long as you make sure to keep your finances ready and keep yourself from overspending, then you are sure you are using your prepaid credit card the right way.

Credit cards are basically alternatives that you can use if you do not have cash at hand to spend. It makes the process of purchasing much easier especially for people who do transactions on a daily basis. Also, credit cards give you the opportunity of purchasing items that you do not have to pay for right there and then. However, as you purchase these items, the amount that it is equivalent to it is automatically added to your debt. This means that every month, you have to entail yourself in paying off the debt that you have previously made. Credit cards nowadays work for all types of people; from students, employees to businessmen. However, a single credit card is not appropriate for all these people. That is why there are also different kinds of credit cards that are suitable for certain situations and individuals.

Standard Credit Card

The most basic of all credit cards are the standard credit card. It is generally the most popular type of credit card and usually has a medium amount of interest rates. You can apply for one in your bank as long as you are deemed creditworthy of owning such a credit card. In most cases, people use this type of credit card in their daily purchases such as groceries, shopping and the like. Since the transactions of credit cards can easily be traced, the magnetic strip at its back makes it possible to view information regarding the card owner and account.

Platinum Credit Card

Another type of credit card, which is a lot better than the standard one, is the gold or platinum credit card. This type of credit card is generally given to people who already have a good credit history in the past and are totally capable of paying off for a higher debt each month. A platinum credit card offers its owners a much higher credit limit and even a larger withdrawal limit. Such things can enable the card owner to purchase for much more expensive items in the market and provide for their necessities and wants. Since this type of credit card is offered to people who have good credit histories, it may mean that these people have high paying jobs and have a more secure financial status.

Student Credit Card

Aside from these types of credit cards, a student credit card is also available in banks today. This is offered to students or young individuals. This type of credit card generally works just as the same with student loans and regular bank accounts. However, before signing any contract or deal, make sure that you have carefully gone through all the terms and conditions of your student credit card. What is good about this type of credit card is it usually has a lower interest rate that will give you more chances of saving up.

Business Credit Card

Another type of credit card is the business credit card which is mainly offered to people who engage with business transactions on a regular basis. This works well for businessmen since it’s a card that has all sorts of offers and additional bonuses. Also, it can have longer credit limits that enable businessmen to forgo their transactions without the concern for paying for their debt immediately. If you are deciding which type of credit card to choose then it is important to first assess yourself and your financial capacity for such a huge responsibility. Having a credit card is extremely a huge responsibility and owning the right one will definitely give you more benefits.

Credit cards can truly be your savior especially on occasions that you do not have enough cash in your pockets to purchase an item that is badly needed. It can offer you the chance of buying a variety of items, materials, services and properties without having to pay for them at once. However, having a credit card can also have its own disadvantages in the long run.

Cons of Having A Credit Card

Since credit cards are formed under certain terms and agreements that are laid out by their banks, it means that whatever non-fulfillment of such may entail you for consequences. The most common consequence is having a higher cost of payment especially if you do not pay on the specified time that the bank required you to. Furthermore, if you are late on your regular payments, it can cause you to have bad credit ratings which in turn can lead to lower creditworthiness in the future. This means that in any event that you want to open another credit account, or perhaps issue a personal loan from another bank; it may give you a lower credit line. Since you already have a bad credit history with your current bank, then it may naturally imply that you do not have the proper resources to fund another account, and therefore all your bank applications rejected.

Overspending Tendencies

Aside from these, since having a credit card means that you can buy absolutely anything anywhere, it can lead to overspending. It can cause you to have a lot of debt in the future; a debt that is simply too expensive for you to handle. Since having a credit card gives you the freedom to buy, it can lead you to be too impulsive and impractical in the things that you purchase. You then purchase on fancy instead of necessity.

Need For Budgeting

Having a huge debt is especially difficult if you are not efficient in regulating your finances or your resources. The same goes if you are not providing a certain percentage of your income to cover for your debt payments. In cases like this, it can give you serious problems in the future and things may even reach a legal process when you are still incapable of paying off your credit debt.

Confusing Terms And Conditions

In addition, credit cards have complicated terms and conditions that at times even the borrower himself does not understand completely. At times these complications lead to the borrower assuming the wrong things and thus, using the credit card the wrong way. Also sometimes the borrower is not entirely sure of the uses for the different amounts that he is paying for, such as additional fees like interest rates, service fees, and such.

Clearly, having credit is indeed a great thing especially if you do not want to bring with you a lot of cash at all times. However, it is such a huge responsibility to own a credit card that it is crucial that you yourself must first understand the limits that it provides you. In order for your credit card to help you in your finances rather than burying you in huge debt, you have to make sure that you are absolutely capable of regulating yourself as to which items are necessary and which are not before buying such items in the market.

In this country, there are three major credit bureaus: Experian, Equifax, and Trans Union. They offer information to lenders about a person’s credit score. The lower your credit score, the less likely you are to get credit. Each credit report comes with “score reason codes” to explain why your credit score is where it is.

It is up to you to know what is on your credit report and keep the data up to date. You might have paid your bills on time, but your credit report may show that your credit is less than perfect. You may have had a credit dispute with a merchant that was corrected, but not shown on your report. You may have a bankruptcy that was not properly recorded. You may also have experienced credit fraud.

You can fix your credit profile. You can make sure that you aren’t carrying more debt than is reasonable for your income level. Avoid late and non-payments. Make sure that there are no judgments or liens against you. You should also avoid co-signing loans because they are considered your financial liability. If the co-signer defaults, it will be your responsibility to repay the loan. You should avoid unnecessary checks of your credit. Each credit inquiry is recorded and remains on the books for two years. Lenders seeing too many inquiries may think that you are unable to support your current debt and are looking for more credit to support it. Having excessive unused credit is not good. A lender will check to see how much credit you actually have. If you have too much, the lender might worry that you will use up all your credit in a spending spree after you secure a new loan or mortgage.

It’s important to see your credit score and keep it up to date. Most lenders are concerned about your credit activities during the past year or two. You want to make sure the report is accurate for this period and contains no errors. Depending on how inaccurate your credit report is, you may not be given additional credit. This is especially crucial if you are applying for a mortgage. It is not impossible to get a mortgage with less than a perfect credit report, but the amount of the loan and the interest on it will be higher if the lender decides you are a risk.

How do you keep your credit report up to date? There are services, such as Equifax, that will provide a credit report to you and advise you on how to make changes. They will usually update you twice a year on your credit history. They may even advise you when you are approaching your credit limit. Under federal law, you are entitled to a free annual credit report from Experian, Equifax, and Trans Union. You should go to http://www.annualcreditreport.com for more details.

Make sure that when you decide to fix your credit report that you do it the right way. The Federal Trade Commission (FTC) warns consumers to beware of companies that guarantee that they can remove late payments, bankruptcies, or similar information from your credit report. Stay away from companies that charge a lot of money to repair credit, keep asking you to verify information that you have previously verified, refuse to give you their address, or push you to make a decision immediately.

Credit cards are used by a lot of people today. Besides, with a credit card, you can purchase the items you need in your everyday life without the need to carry any money at all. The bank will be the one to pay for your purchases but you will also be required to pay it back on a monthly basis. The bank will send you the billing statement that will contain all the billing information, such as the items or services you purchased and also the interest.

However, most banks will require you to have a good credit rating first. A credit rating is important. It will determine if you can get a mortgage or in this case, a credit card. Without a credit rating, you will find it hard to apply for a credit card.

A credit rating will contain all the necessary information that the bank will need whether they can issue you a credit card or not. It will contain information, such as if you recently applied for credit, how long you had the credit, what type of credit you have (loans, mortgage, credit cards), how much you owe, and also your payment history.

A good credit rating will get you the exact credit card you need.

However, if you don’t have a credit rating, you will really find it hard to apply for a regular credit card but it doesn’t mean that you can’t apply for one. There is one way that can help you establish a credit rating and at the same time, get a credit card. This is called a secured credit card. This particular credit card is great for people who are looking for a way to establish a credit history or to repair their credit rating.

Getting a secured credit card is one of the best ways to establish a credit history. So, you may now ask what the difference between a regular credit card and a secured credit card. A secured credit card uses the money you deposit in the account. This card will also have a balance limit that will not be more than the amount you deposited in the account.

Once you deposited an amount on the credit card, you can now use the credit card at once. With this kind of feature, it can be both beneficial to the lender and the borrower. Not only that this will establish a good credit history for the borrower, but it will also minimize the risk of overusing the credit card because he or she is only limited to spend the amount they deposit.

For the lender, a secured credit card will minimize the risk of not being paid back by the borrower. The secured credit cards also don’t have an annual fee that you have to pay for.

Establishing a good credit history will start once you start using your secured credit card. Also, you can use the secured credit card for as long as you want. In time, as you build your credit rating, you can now apply for regular or unsecured credit cards.

The main drawback of secured credit cards is that it will usually have a higher interest rate than most unsecured credit cards.

Secured credit cards are great for people who are just starting out on establishing a good credit history. However, you should always make sure that you can afford to pay for the monthly bill in order to establish a good credit rating. Unsecured credit cards require you to be responsible, if you think that you are not responsible enough in terms of spending, you shouldn’t apply for an unsecured credit card yet.

A lot of people are running into financial difficulty these days – especially with a lot of major corporations going through layoffs and buyouts. What this means is that a lot of people find themselves suddenly unemployed and it may take some time to get another good-paying job. When financial difficulties come, and they stay around for a while, the thought of declaring bankruptcy will come into some people’s minds – especially when the debt starts getting out of hand, with no light at the end of the tunnel. Here are some thoughts about bankruptcy that will help you to make that important decision of “Should I, or shouldn’t I?”

What Declaring Bankruptcy Means

Declaring bankruptcy is basically an indication that you are not able to pay the debts that you have legally incurred. For this reason, and the legal examination of your bills and the way you handle your finances, as well as the humiliation involved, makes it a rather stressful process. It means that you will have to seek credit counseling, too.

Because so many people are attempting to get out of their debts, for one reason or another, Congress has passed an Act, which was signed by President Bush in 2005, to place certain limitations on declaring bankruptcy and who can do it. This Act called the “Bankruptcy Abuse and Consumer Protection Act,” seeks to make it more difficult to declare bankruptcy and to help the creditor to receive a higher degree of compensation. This Act called for higher bankruptcy filing fees, credit counseling, and making it more difficult to file under Chapter 7, making it necessary for more people to file under Chapter 13 bankruptcy. Many other details are also covered in the Act that places further limitations on bankruptcy.

Two Types of Bankruptcy

Filing under Chapter 13 bankruptcy means that there is a “reorganization” of your finances, and it does mean that you do repay much of your existing debt. You are required to make a plan that enables you to pay back a lot of your existing debt in the next three to five years. This means the sale of some of your properties (or all of them) in order to satisfy the debt. It is the bankruptcy trustee who will make the decision as to what needs to be sold – not you.

Filing under a Chapter 7 bankruptcy means, once again, that the various assets that you do currently possess will need to be listed, by requiring you to take a “means test,” and then a decision will be made as to what you can keep and what you cannot. Everything will fall under an “exempt” or a “non-exempt clause.” You keep the “exempt” items and lose the rest. The “non-exempt” items will either be sold, or you will be required to pay them back. Some things that are not exempt are child support and education costs.

The cost of declaring bankruptcy can run up to about $1,500 for personal bankruptcy. This includes the filing charges and the lawyer’s fees. The fees, however, are dependent upon how much of an income you have, and it will vary from one state to another. The process of obtaining a legal declaration of bankruptcy, assuming everything is in order, can take up to six months.

After The Declaration Of Bankruptcy

Once you have obtained a legal declaration of bankruptcy, all of your creditors know where they stand. For some, the debts are discharged, and others have received what will be paid to them, or they know what will soon be coming to them. However, it also means that your credit rates have been destroyed, and it will take years to fully repair it. The bankruptcy is placed on your credit rating and will remain there for the next ten years.

What Other Options Are There?

If you are now in a position where you need to consider bankruptcy, then there are some other options that may yet be available to you.

1. Get Credit Counseling

By this, it means work through a debt negotiation company that will take your case to the various creditors in an attempt to work out some kind of a deal. This could be a good step in the right direction because creditors know that if you declare bankruptcy, then they may not get anything. Oftentimes, they will work with you.

2. Renegotiate Your Loans

Once again, by talking with your creditors, you may be able to renegotiate for better loan terms. This could give you a greater leeway financially that could provide just enough of an edge to enable you to get through it with having to declare bankruptcy.

Before considering applying for a low-interest rate credit card you should be aware that it is necessary to have a good credit history before you will qualify. You can get your credit report for free you can find out in advance where your credit history stands. This way you will know if it needs any type of repair before you apply for a low-interest rate credit card.

A credit report is also useful in detecting any errors or fraudulent charges caused by identity theft. Keeping this in mind, build up a solid good credit history and then apply for a low-interest rate credit card as soon as you can keeping a high stand to make major purchases or start a business at some point in your life.

Sometimes, people ignore how to build good credit when it is as easy as paying attention to your overall monthly expenses. Following just a few easy steps, you can make your finances easy to manage, first knowing what accounts are shown on your credit report and then request a copy of your credit report.

Take control of your expenses is not that hard and getting your credit report at least once a year allows you to detect irregularities affecting your credit reputation. Check your credit report carefully making sure the information is accurate and contact the National Consumer Credit Bureau to fix any wrong information.

Pay your bills timely even if you do not pay the entire monthly balance, but making prompt minimum payments. Avoiding go over your credit limit is a good practice even if your credit card company allows you a margin beyond your approved credit because when the time to apply for a low-interest rate credit card comes this will reflect a poor ability to handle your finances.

All credit card companies will take a look at your credit history before approval so build a good one in advance to improve your eligibility, particularly for those good credit card deals. In fact, clean up and improve your credit history should be a top priority before applying for any type of credit. Request your credit card report to find errors or any inaccurate reference to late payments or non-authorized payments as well as other debt-related issues. Most of the time, some of those negative items can be eliminated by yourself without the need to pay companies promising to repair your credit.

Cancel all those credit cards you are not using. If your application for a low-interest rate credit card (you can find quite a few at http://www.0aprmall.com) is denied, you will receive a denial letter where the credit bureau used is listed which gave you the poor rating. There are 3 major credit report companies in the United States and if one of them has a bad credit report and the others do not, you may always contact this company and work with them to fix your report before re-applying.

Often a person’s credit rating has been destroyed due to no intention on their part. It was not planned that way it just happened. I got carried away with a credit card so to speak and it just overwhelmed me is a common refrain. Once into debt, it is often very difficult if not impossible to get out. On top of that, your credit rating may be in not good shape or even in shambles.

How can you restore your credit rating? A person’s reputation and to an extension their credit rating is among the most valuable of assets, Like a mirror once sullied it can be most difficult if not impossible to restore the mirror to its original previous state.

What can be done? It all comes down to personal honesty and consistent efforts at repairing your credit history and creating a new and outstanding current credit report. It all comes down to personal honor, integrity, and sincerity.

If you are sincere about your efforts a lot can be done over time. It is not hopeless; if on the other hand, you are setting yourself up for another run at the bank then you will not succeed and make it tremendously worse for yourself forever. If you lie to people once it can be called a mistake, an error. If you lie again you will forever be branded as a villain.

It is interesting that those who have “bad credit “or “bad car credit or financing: issues do not even see themselves as in the wrong. Indeed Robin Hood and Saddam Hussein saw themselves as great benefactors. It all depends on the perspective so to speak.

In your situation, however, you wish to restore your standing and credit history. Without a valid credit history, you may well find that your options in life are more limited. The tentacles of credit reports go far and wide. Anyone knows with a Paypal account or credit card can source a wealth of information. A potential employer for a good job, that pays well, may not hire you as a result of a poor credit report. Ditto that for landlords as well as new and used car dealers. You may find it very hard if not impossible to obtain a credit card. Sure you may think that credit card was the evil apple of the Garden of Eden that got you into this fix in the first place. However, if you wish to go on vacation both the hotel and auto rental agencies may demand a credit card for their services.

What are the steps to restore your credit history and report? First, visit your local credit reporting agencies. The major credit reporting agencies are Equifax, Transunion, and Experian. Remember all of these companies share information routinely so that you’re the data and your efforts on one report will spread to the others as a matter of routine and modern systems. You can visit or phone the offices personally. There are services on the internet but with your credit problems, hence no charge card, for reasons of confidentiality of billing to another person’s card this may be out of the question.

Ask for a copy of your credit report. By law, you are entitled to it. Remember to bring a number of acceptable photo identification.

Next, go down the list of creditors and people you have not paid. By far the worst thing that you can do if you owe money is to ignore a creditor. Let me repeat that – the worst thing that you can do with a creditor is to ignore the creditor.

Visit the creditor if possible. If that is not possible personally phone. Only as a last resort should you send an email. Apologize to that person and tell them that you are in the process of cleaning up your debts. Explain that you will be sending them an amount on a regular basis. If the numbers are so big that you can never pay off the amount at least make a stab. Perhaps the other person will have written off the debt in their mind as uncollectible and will regard this as “found money”. Regardless of this your attempt to communicate rather than ignore the creditor will melt the heart of almost even the most cold-hearted lender.

It is as if you are a widow whose husband earned the money and took of all the financial affairs. The new widow has a blank spot for credit history. You are in a similar situation of creating a new and proper credit history.

Start a saving account. Place a regular deposit in that bank saving account. If you are working and have a job this can be done painlessly through automated deposits from your paycheck.

Once you have built up a balance in your bank or credit union savings account ask to take out a small loan with the balance of the savings account as collateral. The payback that loan on time and promptly. Do this over a number of times.

Next, the bank may even issue you with a charge card. Only use a charge card where you place a pool of money as a fund that you spend and nothing more. Use this charge card for routine everyday purchases to build up a monthly balance and cash flow.

Again it is most important that you pay all bills on time never skipping or missing a payment.

There is no secret to restoring a damaged credit rating. It comes down to personal integrity, trust, and consistency of actions.