Bad Credit-Re Establishing Your Credit

Bad credit does not happen overnight it is usually caused by a series of small financial events over the course of time that eventually come together and form a bad credit report. Many people with bad credit feel as if they are in a bad catch 22, they cannot re establish their credit because they have low credit scores and they cannot improve their credit with out getting new credit accounts! So how does someone with bad credit go about re establishing new credit accounts?

Secured credit cards are one of the best ways for the bad credit consumer to begin the path to re establishing . A secured credit card is secured by a cash deposit into a account set up for the borrower. Because they are secured by cash these types of cards carry almost no risk for the issuing bank and are very easy to acquire. The amount of the cash deposit will decide the credit limit for the card you are issued. However most secured credit cards will start with a credit limit in the range of $250-$500 dollars. The great benefit of secured credit cards is the credit bureaus have no idea if the card you have is secured o r unsecured so the positive impacts to your credit score will be the same. The goal to using this type of card effectively is only take the balance up to 40% of the credit limit and never pay 30 days late.

When you have successfully paid on your secured credit card account for a period of 6-8 months you can begin to move up and try for other credit accounts. The idea is to only open accounts you need and will use. This is done to avoid to many credit inquiries and having to many active accounts that are not in your best interest. The next step after a secured credit card is a gasoline or department store card. These credit accounts will generally have a small credit limit but when paid on time and combined with the secured credit cards your score can rise dramatically.

After 18 months of paying your accounts on time your credit score and profile should have improved and you can try for other needed credit accounts such as car loans, unsecured loans and unsecured credit cards. You should how ever keep in mind that to much credit can be a double edged sword as well, if you decide to max out all your new credit accounts your scores will drop and you will have new monthly payments to deal with. Use common sense take it slow and begin re establishing your credit today!

There are over 1000 mortgage, real estate and credit articles available at http://www.mkemortgage.net/content/sitemap.htm that can help you educate yourself and make the proper financial and real estate decisions. And borrower's who may have very bad credit please visit http://www.bad-credit-finance-guide.com/content/sitemap.htm for informative articles on your credit and how to get financing with bad credit!

Learn more about using credit cards to help your credit HERE

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