6 Tips to Rebuild Your Credit Using Credit Cards

You know you want a better credit score, but you may be uncertain as to how to do that. There are several ways to boost your score that only take a few months. The easiest way to do this is by getting a credit card. Having a credit card and managing it properly will make creditors believe that you are a responsible borrower. Read More to find six tips to rebuild your credit using a credit cards.

Tip #1: Skip the prepaid credit cards.

If you’ve had problems with paying your monthly credit card payment, then prepaid credit cards may sound like the way to go. But getting a prepaid credit card doesn’t matter because credit agencies don’t consider them valid forms of debt. While you may like the idea of prepaid credit cards, they won’t help you rebuild your credit score.

Tip #2: Don’t apply for every credit card.

When you’re trying to rebuild a low credit score, it can be tempting to apply for every credit card available. This method often backfires. Your credit score can drop if there multiple credit checks within a short period of time. Instead, shop around for the best credit card deals and only apply for one card at a time.

Tip #3: Look for annual fees.

Some credit cards may not charge you for an annual fee while others will. It’s essential to be aware of any annual fees you may be liable for. If a credit card company promises you no fees, do careful research before signing up.

Tip #4: Read the fine print.

When you’re ready to rebuild your credit score, it can be easy to take the first credit card offer that comes your way. But don’t let desperation get the better of you. Take the time to sit down and carefully read the fine print. Underline the phrases that confuse you then look them up online. By doing your research, you can avoid getting taken advantage of by high-interest rates or hidden fees.

Tip #5: Spend small amounts.

When you have a credit card with several hundred dollars on it, you may think the smart way to boost your credit is to spend most or all the balance. The problem is you’ll look like you don’t know how to manage your money properly. Instead, aim to spend small amounts that you can easily pay off within the next four weeks. When you do this, you look like a credit card owner that can handle other forms of debt responsibly.

Tip #6: Always pay on time.

Not only can late fees cost you extra cash, but they also look bad on your credit report. Most credit card companies will allow you to set up an automatic draft, so your monthly payment is taken from your bank account. Credit agencies look favorably on borrowers that pay their monthly payments on time.

As you’re working to rebuild your credit score, one of the most important things you can do is to review your credit report yourself. You’re entitled to one free annual credit report from each of the three big credit agencies. Look over your credit report carefully. If you spot any errors, you’ll need to file a dispute with the credit agency that has the error.

The credit agencies are not connected, so if the error is one more than one of your credit reports, you’ll need to file a dispute with each agency individually.

Rebuilding your credit may take a few months to several years, depending on your circumstances. Paying your credit card monthly will help boost your score and open other lines of credit to you. Not only will you reap the financial benefits of a higher credit score, but you’ll also feel financially secure, and that’s one thing you can’t put a price tag on.



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