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Repairing Your Credit
By: Max Hunter
We live in a consumer society where it seems like more attention
is paid to your credit record than to your criminal background.
Credit has been elevated to a position where it permeates every
factor of a person’s life and has even crossed over into the
realm of being a moral question. Have you ever been made to feel
guilty or embarrassed because you can’t get a loan? What about
having your credit card rejected at a restaurant or department
store? It’s not just that you don’t have money readily
available, it’s that you suddenly become a pariah in the eyes of
some cashier. And, of course, to everyone that is standing
around within hearing distance.
Nearly everyone has been in one of these situations one time or
another. And, it begins to weigh heavily on your psyche. Don’t
despair! Having bad credit does not mean you are a disreputable
person AND there are very few credit situations that are beyond
repair. You just have to know what steps to take and what order
to take them in. If you are careful, payday loans can be an
excellent means of reestablishing your credit.
There are several ways you can go about clearing up your credit
situation.
Payday Loans
A payday loan may be able to help you re-establish your credit.
The way it works is like this. Get the best loan deal available,
with the least fees. Make it small, say for $100. If you can
find a lender who only charges $10 per hundred, you will owe
$110 on your next payday. Even if you have to pay a $25 charge
for the $100 borrowed, the total payment is still only $125. Pay
it off on the due date, in full. Do not be tempted to roll the
loan over because it will just cost additional fees. Don’t
borrow unless you know you will be able to pay back the full
amount on the date due and do not borrow from multiple lenders.
Repeat this process several times to build a good reputation
with the company. Payday transactions are ones that may or may
not be reported to credit agencies, but you can generally add
good reports to your own credit profile. It may cost $2-$3 per
lender and you must ask the lender before proceeding.
Credit Cards
According to the Credit Repair Institute, a Visa or MasterCard
are the best credit references you can establish.
At first glance, this may not seem like a great solution because
you are thinking that you probably can’t possibly get a credit
card. However, there are banks and other lenders out there who
will issue limited value credit cards to people with bad credit,
on a couple of conditions. First, you will probably have to pay
a fee to get the card in the first place. Then, it will probably
be limited to a small amount, say $200. Pay the fee, get the
card (making sure that it doesn’t charge huge interest) and use
it very, very wisely. In other words, go make a small purchase
on the card instead of paying cash for something that you
already intend to buy and have money for. Then, use the cash you
already had set aside to pay the credit bill, before the due
date, so there are no additional interest fees. Repeat the same
process several times, over several months. Always make sure you
are not buying something extra that you may not have money to
pay for, just use the card to establish good credit.
Other banks issue secured credit cards for which you deposit a
particular amount, for example $200. Make the deposit, get the
card, and then make several small charges on it – again ones
that you know for certain you can pay back in full before the
due date so that you don’t accrue any extra interest fees. Shop
around for the card and make sure you get the best deal
available in terms of annual fees, annual percentage rates,
grace periods and any surcharges that may be attached. Secured
cards are nearly as good a means of bolstering credit as
unsecured ones.
Get a Loan
That sounds like crazy advice, but if handled the right way, it
can quickly rebuild your credit. According to the Credit Repair
Institute, this is a fast and reliable method, and can be done
with as little as $400. It involves opening a savings account at
a local bank with about $400. After the account is established,
ask the bank for a loan and tell them you want to secure it with
the savings account. They are likely to grant you at least 70%
of the money you have in savings and, in some cases, up to 100%.
Take the money from the loan and deposit in a savings account at
a second bank, get a loan against that and deposit that in a
third bank. The money borrowed from the last bank can help pay
the first few payments on the others. Make certain that you make
payments on time and as agreed. Also make certain that the banks
report your payment history to the three major credit bureaus,
monthly.
According to the Credit Repair Institute, this is the quickest
way to rebuild credit quickly. In the meantime you will be
paying for it by paying interest, but the good news is that the
interest earned on the funds deposited in savings will partially
offset the interest payments you will be making back to the
bank.
About the author: Max Hunter is the author of many credit
related articles. If you are looking for help with Payday loan
or any type of faxless loans please visit us at http://www.PaydayLoanChoice.com
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