Proven Fastest Method To Rebuild Your Credit by Amanda Hash

People with good or excellent credit qualify for the best rates and terms when they apply for financing, not only on home purchase loans, but on smaller lines of credit, like auto financing. If you have a less-than-perfect credit score, there is a proven method that can help you prove your creditworthiness in the shortest period of time while raising your FICO score.

Potential Lenders Look At Prior Credit Card Usage Habits

One of the major determining factors that potential lenders look at to discern the type of borrower you are is the manner in which you use your credit card(s). You may have had cards in the past that are now in default, or you may have current cards that are maxed out. No worry, there is hope for you. You can turn lemons into lemonade by learning the best way to use credit cards to your advantage - and you may save a few dollars in the process.

Work Out Payment Plans With Creditors

If you have cards that are in default or collections, you can contact the collections agency to try to establish a payment plan. If both you and they agree to the terms of repayment, be studious in your efforts and honor your agreement with timely payments. If the account has gone into charge off status, however, there is not much that you (or they) can do - even if you do repay the account.

For those cards you might have that are up to or over your spending limit, begin by making at least twice the minimum monthly payment on them. When their balances start to fall - do not charge anything else on them. Just keep paying them down. This will build up your ratio of available credit versus extended credit, which makes you look (a little bit) better.

If you have been late on card payments for this account, chances are your interest rate has been changed to a default annual percentage rate, which means you are probably paying outlandish interest. Once the balance due is at a more manageable level, you might even qualify for a better rate on another card; this would then be a good time to consider transferring your balance onto a new card. It is important, however, to keep the card account open even after transferring. This makes you look like you have an older line of successful credit, which always sheds more favorable light on your situation.

Card Specially Designed For Your Situation

Look for a card that has been specifically designed for those with poor or bad credit. These types of cards are unique because they offer smaller credit lines that are easy to manage and leave little room for indulgences, which is a big part of the urge that borrowers have to overspend. With an initial spending limit of less than a thousand dollars, these cards are perfect for charging gasoline, groceries, and utility payments - all of which must be paid each month either way.

By paying the balance off in full each month on your new card, you not only save yourself a heap in interest charges, you also add points to your credit score by showing that you can handle money.

Yes, you can take charge of your financial future, and wise credit card usage is a proven way to add points to your score while proving to the lending world that you are ready to start fresh and that you have learned from past mistakes you may have made. Many companies are conveniently located just a mouse click away, and offer not only a simple online application, but nearly instant decisions after you apply. These companies are specialists in dealing with people in your situation, and they have helped countless millions to regain control of their credit.