Improve Your Credit Rating By Using Credit Cards

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This certainly sounds like an oxymoron, taking on more debt to improve an already failing credit rating. Credit cards just don’t sound like the best way to make something better based on a poor history. But honestly, how can anyone in the future assess that you’ve learned your lessons if you have no credit cards or open accounts. This makes completely destroying all your cards not only a waste of time but counterproductive when it comes to rebuilding your history.

Wrong Way vs. Right Way to Use Your Credit Cards

Wrong Way: Continuously go beyond your limit, make only the minimum payment, eat out at a restaurant and not pay it off, not make payments on time, ask for payment extensions and holidays and have more than 10 to 15% of your total debt on your credit cards

Right Way: Buy responsibly, use cards for purchases that you will pay off each month, buy consumables only when paying them off completely each month, make regular payments above the minimum required, get your balance below the 50% level in each card.

Rating Your Cards You Currently Own

Many times people get into trouble by having too many credit cards and the first thing they do is cut them all up and start closing accounts in an effort to reduce their debt. However, it you are wise you will keep maybe 2 or 3 cards open and work to get them under control and get your history back on track. Unless the oldest account you have is extremely terrible it helps to have long established relationships when you begin to rebuild your credit. Most often your credit history for a card is reported as how many times is has been 30, 60 or 90 days late in the last 3 to 5 years. However, the last 12 to 18 months carries more weight than older entries.

Once you begin to get on track with your payments, don’t fall back again. Every new strike will just cause a delay in improving your rating. Making a larger than required payment each month will not only get your balance reduced, but will show the company that you are making efforts to clean up your act.

Developing a Plan for Using Your Credit Cards

Making wise choices with your cards is an important step in recovering your credit rating and there are several ways that you can show improvement that will get your credit score moving in the right direction. They are not hard steps but they do require some discipline.

The first is to make your payments on time each month. Mark your calendar, schedule them automatically, tie a string around your finger, but do whatever it takes not to be late anymore. Once you have 6 to 8 months of consistent payments you will see some improvements to your scores.

The second thing that will affect your scores and have them climbing is to pay more than the minimum required payment. This shows that you are making headway and as a result you will see your debt begin to reduce as well.

The final thing that really makes a difference when trying to reduce your debt and improve your scores is to lower the balance to a manageable level and in ratio that is less than 50% of your available credit limit. Always pay off your new purchase quickly so that you balance does not go up and get the ratio down.

Stopping the use of your card for more than couple of months may cause the credit card company to cancel your account and expect you then just pay off the balance as normal. So it is important that you do not continue to run up the balance but make your timely payments in a fashion that shows your debt going down and your efficiency at paying them going up. Credit cards can help you raise your credit score if you use them correctly.

Article covers how to use credit cards to improve a bad credit rating and talks about… Wrong Way vs. Right Way to Use Your Credit Cards

Wrong Way: Continuously go beyond your limit, make only the minimum payment, eat out at a restaurant and not pay it off, not make payments on time, ask for payment extensions and holidays and have more than 10 to 15% of your total debt on your credit cards

Right Way: Buy responsibly, use cards for purchases that you will pay off each month, buy consumables only when paying them off completely each month, make regular payments above the minimum required, get your balance below the 50% level in each card.

Russell Hart here. I’ve recognised that a heavy debt has become an almost universal problem. I’m taking whatever steps I can to assist in relieving those who are carrying this burden through debt management education, primarily through articles like this and also my blogs, http://www.creditscorex.com and http://www.thedebtconsolidation.org The latter site offers a 10 Module program for those looking to conquer their debt problems. I invite you to visit the sites.

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