If you’ve had difficulties being approved for a traditional credit card, then you may want to consider a prepaid credit card as a way to begin building  or rebuilding your credit.

Prepaid credit cards are still backed by the major credit card companies, which means you’ll have the security of a traditional card. You don’t have to worry about credit checks or employment checks because you’re not borrowing any money. Since you can only spend money that has already been put on deposit, there are no issues with affordability or previous repayment history.

Using a prepaid credit card gives you an interest-free way to access the benefits of a credit card for paying bills and making purchases, but you won’t be increasing your debt levels. You could also benefit from having your payments reported to the credit bureaus, which will increase your credit score slowly as well.

Be sure to do some research before applying for your card, because you will want one that will report your payments to a credit bureau in order to experience the benefits of better credit. Not all companies who offer prepaid cards choose to report your speding activity, so be sure to choose one that does.

Using your prepaid credit card is not all that different from a traditional credit card. The primary difference of course is that you’re not increasing your debt levels by spending the bank’s money. You use your own money to prepay into the account and then pay your bills using your card.

The biggest benefit of using a prepaid card for anyone with bad credit is that you’re not increasing your debt and you won’t be charged interest on your purchases. Remember, the money you spend using your prepaid card already belongs to you.

Another great advantage of this type of card is that you’re forced to learn to be more responsible with your spending habits. Because you can’t purchase things unless you’ve managed to deposit money into your account first, it also teaches better control of your finances.

Learning to apply responsible budgeting practices is a great way to avoid getting stuck in the bad credit cycle again in future. When you develop an awareness of how much you spend and are careful about how much money you spend on shopping trips, you’re learning to allocate money for priorities instead of buying things on impulse. This will help you build positive spending habits rather than putting you further into debt.

Popularity: 36% [?]

Credit repair companies advertise that they can help repair your credit. They are happy to take your money and then proceed to write a simple letter for you that you could easily write on your own.

The usual advertising spiel from these credit repair companies is that only they know how to begin an investigation into the bad listings on your credit report.

What these companies are looking for are any listings from creditors who might have reported incorrect information –  for example, they might have mixed up your report with someone else who has a similar name. They could also be looking for a listing from a creditor who forgot to report an already repaid debt.

Why should you pay high fees to a credit repair company when you can write a credit repair letter on your own and achieve the same result?

The types of issues listed above are all easy to investigate and easy to verify if they are incorrect. By writing a simple letter to the Credit Reporting Bureaus on your own you can dispute these listings and have them removed. Once they’re removed, you’ll see your credit score improve.

Before you begin you should order an accurate copy of your credit report. This is so you’ll know exactly what is listed and who listed it. Make a mark beside anything listed on your report that doesn’t belong to you or should show as repaid.

If you see any entries noted on your report that are actual debts you did apply for and did take out, then these can’t be removed even if they have negative listings for them.

Remember, you can’t legally remove accurate information. However, just because you can’t remove genuine negative listings doesn’t mean you can’t ask the credit reporting bureaus to conduct an investigation into every item listed.

There is no fee for writing and submitting a credit repair letter. This means you can write a letter and request an investigation into every listing — even the real ones.

The credit reporting bureaus are then required to respond to your enquiry within 30 days. If they find a listing that they can’t verify, then they must remove it – which is great news for your credit score!

Here are some tips on writing your credit repair letter:

1. Before writing your letter, do a quick search on the Internet to look for a ready-made template. Be sure to change the wording on the template to include your own information and your own listing details.
2. When you’re done writing, make three copies and send one to each of the three major credit reporting bureaus. You’ll find the contact information listed clearly on each of their websites.
3. Use registered or certified mail to send your credit repair letters out to the credit reporting bureaus. Always keep a record of the date you posted your letters.
4. Keep all copies of all correspondence for future reference.
5. Be patient. It takes time to conduct investigations into your credit report. They will respond, but it does take time.

Writing a credit repair letter might seem like a lot of work for very little reward, but if you can succeed in removing even one negative listing from your credit report then you will have achieved your goal.

Popularity: 5% [?]

If you will be applying for any credit in the near future, it is important to make sure that your credit score is as high as it can possibly be. If you can repair your credit report or increase your credit score, you will increase your chances of having any credit application approved.

In addition to improving your chance of approval, there is a strong possibility that you will also be offered a loan or credit card with lower interest rates and fees. Most lenders only offer their best interest rate deals to borrowers who have positive repayment histories and good credit scores. If you can resolve issues on your credit report you have a good chance of raising your credit score into a lower risk category. In this manner, you will qualify for more competitive credit deals.

It is possible for anyone to take some simple steps to improve their credit score. Easy steps like making sure you catch up on any overdue payments, pay all your outstanding bills and keep up to date with your current bills will definitely help to improve a credit score that’s less than stellar.

However, while these actions will help increase your score slowly, they won’t remove any negative entries that were placed on your credit report by past issues you may have, so your simple steps may not be enough to help you.

And there is another danger if you try to repair your credit on your own: doing the wrong things can actually do even more damage to your credit score.

At this point, it will be helpful for you to understand a bit about how your credit score is calculated. Your creditors submit reports about your financial activity, good and bad to the three major credit reporting Bureaus (Experian^®, Equifax^®, and TransUnion^®).  These bureaus examine your current loan activity as well as your past repayment history. They consider how much credit you have available to you, how much you are currently using, and if you’ve been responsible with the money you’ve already borrowed. Using this information, a score is calculated that lending institutions can use to determine whether or not you are likely to be a good credit risk.

Therefore, if one of your creditors has made a negative report about your credit activity, then the simple act of catching up on a few late payments on other bills will not remove this negative information, nor will it help to increase your chances of being approved for any new credit.

Neverthless, if you are careful and follow the proper procedures, it is possible for you to remove incorrect negative listings from your credit report on your own. To do this, you should write to each of the Credit Reporting Bureaus and request that they investigate the listings on your credit report. They then have 30 days to investigate your claim and if they can’t verify the information on your report, they are required to remove it. I need to emphasize that if you go about this in the wrong way, you risk doing even more damage to your credit. It’s also important to keep in mine that any negative items that are truly accurate can not be removed.

In many cases, a reputable, professional credit repair service can be of enormous assistance. With their experience and the knowledge they can very possibly negotiate with your creditors to remove any negative listings you have on your report. These professionals are also trained to know which types of negative information can be removed and which ones can’t.

Most of the time you will also find that if you call your creditors to question a negative credit report item you find, they won’t be willing to work with you directly. When a company is in the business of credit repair, they have many different levels of access to your creditors, which means they may be able to negotiate where you couldn’t.

Of course, there are fees involved when you work with any reputable credit repair company, but you should keep in mind that those charges will be well worth it when you find that your credit score has been raised back into the normal ranges and out of the sub-prime ranges.

Always research any credit repair company thoroughly before agreeing to anything. Ask questions and read the fine print. When you’re sure this is the option you want to take, call your chosen credit repair company and get your bad credit repaired today.

Popularity: 7% [?]