Finding out that your credit rating has taken a dip can be worrying. This will be an even bigger problem if you are hoping to get a mortgage or need a loan quickly. The best interest rates will be given to people with a good credit rating. If you have a bad credit rating – or are young and do not have a rating at all, you will need to build credit fast with your credit card. A card can be the quickest way to do it.
Choosing a credit card
There are special credit cards for people who want to build their rating. In order to build credit fast with your credit card, you first need to be accepted. So, searching out the most likely options is vital. Too many refusals will make the job even harder. To give yourself a better chance you should:
- Be on the electoral register all the time.
- Try to remain in the one house – transience will work against you
- Be named on utility bills
- Keep up to date with paying off all bills that are in your name.
- A good employment history will put you in good stead.
Using Your Card Wisely
Once you have been accepted, you have the chance to build up your history. It may be the only chance you get, so make sure you do everything right. Many companies offer the cards, so make sure you read up on the one that has given you the card. Proving you can be responsible with money will lead to better deals later.
The great thing about this is that you can rebuild your credit, but you MUST pay off the full amount each month, or there will be a high rate of interest to pay. If you can’t do this, it is still worth having the card but it is going to cost you to repair the damage. If you never miss payments, after a few months there should be a slight improvement in your rating.
How to Use the Card
Although the cards can be used in the same way as a credit card, what you buy may give an insight into your lifestyle. Lenders may not get to see what you buy, but if you start to have problems paying the card, their opinion may change if a lot of the purchases are luxury items and things such as alcohol. The card providers want to protect their money as well.
Try to keep within 15% of your limit as this will show that you can survive without the card but want it for the odd purchase. It does not look good if you are continually at the limit. Treat this type of card as you would any other – don’t spend on it if there will be a problem paying it off.
Upgrading Your Card
As your credit improves, you will find that there are other forms of credit becoming available to you. Soon more mainstream credit cards providers will see you as worthy of their services and you will be able to use a card with a lower rate of interest. It could take 12 or 18 months before this happens, but this will give you the chance to sort out your mindset regarding your finances.
Before you know it, you will be able to use a rewards credit card and earn as you spend. There are times when you cannot build credit fast with your credit card because of abusing it. This could lead to issues such as mounting debts and continual calls from providers. But when used correctly, credit cards are a great way to rebuild a damaged credit rating.