If rebuilding your credit is a top priority, having a good credit card is an important step toward achieving it.
“Instant approval credit cards, ” also referred to as guaranteed approval credit cards, seem appealing because they don’t require a credit check. But with these kinds of cards, you tend to end up with a bunch of hidden fees, a card that doesn’t report your activity to the national credit bureaus (which means they won’t help your credit), or a prepaid card, which isn’t a credit card at all.
If you’re trying to get back on the right track, you’re better off with a secured card that doesn’t impose punishing fees but reports your payment activity to the credit bureaus. Here are some tips to get you started toward better credit, plus a couple of secured credit cards that are worth considering.
Rehabilitating your bad credit
Regardless of how you got to this point, know that there’s a way out, starting with these four steps.
1. Check your credit report
A 2013 study by the Federal Trade Commission found that a quarter of American consumers discovered errors on their credit report. Even if your credit score is in the dumps because of some past mistakes, there may be incorrect information on your report making it worse. Checking your credit report will also show you all outstanding accounts that may be delinquent or in collections, so you can know where to start.
You’re entitled to one free credit report every year from each of the three major credit bureaus: Experian, TransUnion and Equifax. You can order your report at AnnualCreditReport.com.
2. Pay on time
Your payment history comprises 35% of your FICO score, making it the factor with the biggest influence on which direction your score goes from here. If you’ve fallen behind on payments, avoid missing more payments because you’re trying to catch up. Instead, focus on paying your current bills on time.
3. Pay off debt in arrears
Once you’re making on-time payments, direct your efforts to paying off delinquencies and collection accounts. This may feel like a lost cause because you’re already in a hole credit-wise, but the longer your accounts are delinquent, the more negative the impact will be on your credit score. You may also face legal ramifications if you default on your debt.
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NextCard, Inc. was a United States company that was one of the first issuers of credit cards online, and the first to offer instant online approval. Its headquarters were located in San Francisco, California and maintained offices in Livermore, California and at 44th St. and Van Buren in Phoenix, Arizona. The issuing bank was known as NextBank...