A bad credit file can make life really difficult in this current recession. More and more people are reliant on borrowing money from anywhere they can, be it through loans and credit cards, in order to live financially. Borrowing money is harder than ever nowadays so having a mark against your name for missed payments for credit cards bill, utility bills or any other financial obligation can cause severe difficulties in the future.
Something that can make the situation worse is constantly applying for credit and getting rejected. This constant application leaves a trace on your credit file which does not help at all. If this happens to you, then your last resort may be by borrowing through the sub-prime market which is not favourable as you will be charged extortionate interest rates. If this sounds like the scenario you might be facing, then below are several steps you can take in order to help you salvage your credit rating without taking drastic measures. One vital thing to do first is to check your credit score so that you can take action to improve it if you need to. Visit credit agencies online, such as Equifax and Experian, to check your score.
There are simple steps that you can take to improve your rating such as making sure you are registered on the electoral roll at your current address; making sure that all your current debts are under your correct name and address; ensuring that there are no other mistakes on your file, such as someone else’s debts or payments and lastly, shut down any previous credit agreements you no longer use. Lenders like to make a note of any stable factors in your life, for example, when filling out an application form for credit, make sure you write down your home landline number as opposed to your mobile number. Other factors such as a long employment history, a fixed place of residence and a long term history with a bank also will help you with credit applications.
Once you have gone online to check your credit score and history, you can take the necessary steps to recover and rebuild your credit file. One of the simplest ways to start is to purchase a prepaid credit card. These are fantastic if you have applied for credit and debit cards previously and have been rejected due to an unfortunate credit history. The great thing about prepaid cards is that you do not need any identification or a credit history – you simply buy it, load it with money and then spend it like a normal credit card.
Prepaid credit cards are a great way to build your credit rating as these prepaid cards feature special benefits for those you are in need of help in the credit department. You sign up for them and then pay a monthly fee for twelve months and these payments are noted down and then sent to various credit reference agencies that will see that you are making payments on time. This will prove to them that you are handling your money management sensibly, responsibly and are credit worthy. Over time, using these prepaid credit cards will definitely improve your credit. There are several types of prepaid credit cards on the market so spend some time researching which one will best suit you.
If you are one of those unfortunate people who have never had credit but have still been turned down, then don’t worry as you are not to blame. Creditors feel more secure dealing with people who have had a previous history of successfully paying off credit. So those who have taken out a loan or have mortgage payments are more likely to be able to apply for credit than those who haven’t. To build a credit file from scratch, think about purchasing a prepaid credit card as you can use it to make regular payments and hence re-establish good credit. It’s as simple as that!
This author is a consumer products researcher, focusing in bank cards and personal finance. He recommends downloading a free thirty six page guide called the ‘Essential Guide To Your Money‘. For more information, go to the prepaid card website.