A Good Credit Rating Need Not Be Lost Forever
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by: barrywaters
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Word Count: 428
During the economic collapse of 2008 and 2009, many people suddenly found themselves without incomes through no fault of their own. As a result, they were unable to make monthly payments on their mortgages, loans, and credit cards. Many filed for bankruptcy protection. People who had the power to purchase almost anything they wanted just a few months before were powerless to do anything but sit back and watch their good credit rating slip away.
In years past, bankruptcy would have meant that all purchases would have to be made with cash for at least seven years, rendering big purchases such as appliances and cars pretty much out of reach. Now, a creditor who wants to reestablish his good credit rating can turn to secured, or bad credit credit cards to start the process. Bad credit credit cards are not meant to be an easy fix for the irresponsible, however.
An upfront cash deposit is required to obtain bad credit credit cards, and they allow only a minimal initial credit limit. By using the card to make small purchases, an individual can pay the balance off monthly and gradually build their credit rating back up. Then, once a good payment history is established, the lender may gradually increase the credit limit and eventually switch the customer to an unsecured card.
At first glance, bad credit credit cards may seem like the perfect answer, but there is a downside. Certain lenders may charge outrageous fees in the first billing statement that drain the credit limit dry. They will also frequently charge high interest rates that can themselves eat up the credit limit and generate over limit fees and charge interest from the moment of purchase, rather than allowing the usual one month grace period.
If you do your research well, however, bad credit credit cards can be a valuable tool for reestablishing your credit rating. Be sure that your chosen card company reports to all major consumer credit bureaus. Otherwise, all your good intentions will go to naught. Also remember that bad credit credit cards are only a tool to help you get back on your feet and not a permanent solution. You are on your way to a fresh start if you can find a card company that reports to the major credit bureaus, charges reasonable initiation fees and interest rates and offers a grace period for interest on your purchases. Related info Credit card applications . Bad credit credit cards .
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