How to Fix a Damaged Credit History Using Rebuilding Credit Cards?

Bad credit history can make it difficult for you to get loan approvals. It can significantly lower your credit score, which can be really problematic for you in so many ways. It can cause you problems in getting your loans approved. It can make it difficult to get houses to rent, jobs, school admissions, etc.

But there is a way to raise the credit score fast with simple measures. Use of credit cards is one way to do so. You can rebuild your credit using secured or unsecured credit cards. These cards can be your existing ones as well as any new one to rebuild your credit.

Here’s how to fix your damaged or poor credit history with rebuilding credit cards.

Start paying off credit card debts

It is vital that you pay off any existing credit card debt in order to rebuild your credit. Even if you can’t pay the entire amount at one go, any payment is better than no payment.

Once you have taken care of this aspect, you must look at the other steps that you can take to fix your damaged credit history.

Apply for a new credit card

If the available credit in your existing credit card/s is low, it can negatively impact your credit score. But you can increase it by getting a new card. It will improve your overall credit balance and help raise your credit score. It may not seem like much in terms of helping your credit history. But it is still a positive step.

If possible, apply for a secured credit card. You will need to pay a deposit to get such cards. Banks ask for a deposit as your loan collateral. Your credit balance is likely to be the same as the deposit. The banks can increase it if you continue to make timely payments. Banks pay attention to timely payments and can raise the credit limit on credit cards if they deem it a safe decision.

If your credit scores are very poor, you may find it difficult to get unsecured credit cards. These cards require no deposits on your end. But if you do to get one, you can use it also alongside the secured card. If you can’t pay the deposit on the secured cards, you will need to manage with an unsecured one.

Use your credit cards

Credit cards help the lenders see if you are a good borrower. So, you need to use the cards and then make timely payments on them. Be cautious to not max out any of your cards. You can choose one or two monthly purchases on your new card and continue to make timely payments. But use your cards but sparingly.

You need to be mindful of the credit utilization ratio, which is the percentage of the credit balance vis-à-vis your credit limit. Credit utilization is a very important factor that is used to calculate a person’s credit score.

Ask to increase the credit limit on the cards

Once you have stabilized your credit history a bit, it is a good idea to request your bank to increase your credit limit. Even a tiny increase is better than none. A higher limit can help you in reducing your credit utilization and improve your credit score.

Keep the credit card accounts open

Lengthy credit history is an important factor in calculating credit scores. So, keep your credit cards open for as long as you can; especially the older ones. If you have credit cards that do not come with annual fees, it is best not to close them. Close your older credit cards only if the annual charges on them is simply too high for you.

You can also close the new secured credit card once your credit scores have improved. The bank will pay back your deposit when you close your account. You can simply keep the cards with low or no fees open. If you continue to use them wisely, it will continue to help with your credit score. Improving bad credit takes time and efforts. But it is possible to do so with measures such as rebuilding credit cards.

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