Bad Credit -- Credit Cards (pay, deposit, checking account, increase)
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Without getting into the reason why , my credit fell victim to some charge offs.. Now being in a place to start to rebuild. Looking for gain better credit and obtain a credit card once again ( low limit-- need for travel hotels, online orders etc)
1. Any suggestions on bad credit - Credit cards or good resources
2. Can paying this new card ontime help build credit back?
There are a number of bad options out there, sometimes called "fee harvester" cards. They offer very low credit limits (maybe $300) with fees for pretty much everything imaginable. Like a startup or setup fee (perhaps $50-$75) plus an annual fee plus even a monthly fee for actually using the card. After all the fees kick in, you end up with maybe $100 of available credit and $200 of debt before you spend a dime, which means it is never going to be useful for travel. These cards do offer the opportunity to build credit if the balances are repaid timely and do offer credit increases over time, but at a very high cost.
A better option can usually be found at your bank or credit union in the form of a secured credit card, which involves an upfront cost in the form of a locked deposit which serves as collateral for your credit line.
Get two cards: one secured and one unsecured. A secured credit card functions essentially as a debit card - i.e., you load on, say, $200, and you can spend up to $200 (then have to pay it off entirely and on time as with any credit card). It's secured in the sense that it's your money you're spending, then why you pay it off it goes back to kind of a positive balance. These are integral in the beginning stages of rebuilding poor credit, especially if caused by credit cards. CapitalOne has a good secured CC. They report often to the three bureaus, and for whatever reason, it's weighted better than normal CCs.
The second, a conventional credit card. Get one with 0% APR for at least the first 12 months, no annual fee ever, and with the highest balance you can muster. Use it frequently and keep the balance around 5-10% (paying off entirely won't hurt you, but carrying a small balance will boost your score faster than have $0 balance).
How old are you, and what does your credit portfolio look like (i.e. - do you have any other CCs at all)? If you don't have other CCs, it'd probably do more good than harm in the long-run to get two conventional CCs as well as the one secured card, as it will give you lower utility and hurt your score less in terms of age of accounts in the long run than getting one this year and another one in three years.
Get two cards: one secured and one unsecured. A secured credit card functions essentially as a debit card - i.e., you load on, say, $200, and you can spend up to $200 (then have to pay it off entirely and on time as with any credit card). It's secured in the sense that it's your money you're spending, then why you pay it off it goes back to kind of a positive balance. These are integral in the beginning stages of rebuilding poor credit, especially if caused by credit cards. CapitalOne has a good secured CC. They report often to the three bureaus, and for whatever reason, it's weighted better than normal CCs.
The second, a conventional credit card. Get one with 0% APR for at least the first 12 months, no annual fee ever, and with the highest balance you can muster. Use it frequently and keep the balance around 5-10% (paying off entirely won't hurt you, but carrying a small balance will boost your score faster than have $0 balance).
How old are you, and what does your credit portfolio look like (i.e. - do you have any other CCs at all)? If you don't have other CCs, it'd probably do more good than harm in the long-run to get two conventional CCs as well as the one secured card, as it will give you lower utility and hurt your score less in terms of age of accounts in the long run than getting one this year and another one in three years.
I am 30.. Currently I have no Credit Cards.. I had a personal loan that was always paid on time and now finished and a car loan that is up to date , ( couple late payments over 5 years) that will be paid off in 2-3 months. I had 3 CC credit cards that I basically abandoned and went to collections. ( 2 store cards and a discover)
Now that my basic financial situation is better I want to try and rebuild credit and also have that convince of a CC ( learning from my past mistakes and greed) , but honestly my main concern is building back my credit. Just in today's market place not having a CC is not always easy to get around.
I am 30.. Currently I have no Credit Cards.. I had a personal loan that was always paid on time and now finished and a car loan that is up to date , ( couple late payments over 5 years) that will be paid off in 2-3 months. I had 3 CC credit cards that I basically abandoned and went to collections. ( 2 store cards and a discover)
Now that my basic financial situation is better I want to try and rebuild credit and also have that convince of a CC ( learning from my past mistakes and greed) , but honestly my main concern is building back my credit. Just in today's market place not having a CC is not always easy to get around.
Ok, so if you're interested more in long-term building of credit and don't just want a quick bump in your credit score this year, I would advise to get that one secured CC, and the two best traditional cards you can (0% introductory APR for xxmonths, no annual fee, points that will benefit you based on your spending habits). Starting two new CCs at once or within a short amount of time will make your score drop a tiny bit, but in the long run, the higher credit limit and lower utility will offset this.
There are a number of bad options out there, sometimes called "fee harvester" cards. They offer very low credit limits (maybe $300) with fees for pretty much everything imaginable. Like a startup or setup fee (perhaps $50-$75) plus an annual fee plus even a monthly fee for actually using the card. After all the fees kick in, you end up with maybe $100 of available credit and $200 of debt before you spend a dime, which means it is never going to be useful for travel. These cards do offer the opportunity to build credit if the balances are repaid timely and do offer credit increases over time, but at a very high cost.
A better option can usually be found at your bank or credit union in the form of a secured credit card, which involves an upfront cost in the form of a locked deposit which serves as collateral for your credit line.
If you have bad credit don't even look at a bank. You'd have a difficult time getting even a secured card there.
Try Capital One... A lot of people have good luck rebuilding there. There are also some good secured cards available, you might check out the MyFico forums as well - there are tons of people there that are very knowledgeable about building credit back up. I spent a lot of time there when my scores were in the 500s and with the help of many there I now have really good credit. It is NOT easy, but you can do it...
Please, whatever you do, avoid the cards like Credit One (Different than Capital One) and First Premiere. Those places will rip you off every time you blink your eyes.
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