A credit card can help you rebuild your credit score. This card will help your ratio of available credit to debt and you can build a positive payment history.
When you have a damaged score you will be faced with a sub prime interest rate. This means you will have an interest rate around 19%.
You should still make efforts to remove derogatory items off your credit report. However it is rumored that once a derogatory item ages four years it will not impact your score as dramatically.
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.
You credit limit will be approximately $300. The other option is to get a secured credit card, however your credit score will not receive the same benefit.
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 of these cards offer online approval. However before you apply for any card double check and make sure that card does report monthly to all three bureaus.
Another tip to help you get the most benefit to your credit is to keep your balance at roughly 10% of your credit limit. For example a credit limit of $300 you will want to keep the monthly balance at $30.
This shows the credit bureaus that you do have available credit; this is called your available credit to debt ratio. In addition it shows the bureaus that you do use your credit.
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 to help rebuild your credit score. It will create a positive payment history and build positive credit.
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