|Posted by Percy A Lowe on March 20, 2013 at 7:00 AM|
Credit cards are viewed as liabilities on your credit bureau once you borrow over half of your credit limit. The credit bureaus see this as a sign of credit dependency and discount your credit score 35%. When this happens you are hurting your credit, paying regular credit card fees, paying interest on your money and carrying around a maxed out credit card.
Our advice to borrowers is to save up enough money so that your initial deposit is large enough to show a decent credit limit on your credit bureau, around $1000. Then leave it alone. It will only cost you the price of the annual fee to keep it in their bank. Most people feel the need to charge something on the card to "prove" they can pay it back. This assumption could not be further than the truth. Credit bureaus do not show monthly payments; they only show the months you have had the account open and any months that you have been delinquent.
So, you want to put your monthly cost of living on one of the secured credit cards if your adverage monthly living is 2,000 and over you need a card that allows you to palce $3,000 on the card. With the potential of rasing the limit after a few successful months. If your monthly living casot is below $2,000 then you need a care that allows you to start off with at least $2,000. Note: if you montly cost of living is below $500 you will have ot create some bills. Like grocery, gas, lunch, and etc.
When a future creditor sees your $1000 open line of credit, higher credit scores and the financial restraint you have demonstrated you will be much more likely to get the loan. Secured credit cards can significantly help you rebuild your credit and have a positive impact on you overall credit score. Unfortunately most people use them incorrectly and end up hurting their credit more than it was before getting the card.
Categories: Credit Education and Restoration