Obtaining good credit when you don't have any at all can be a daunting task. If you have credit but it's a disaster it can be even worse. There are a lot of reasons why you might have bad credit - bankruptcy or divorce just to name a few - but you can always begin to rebuild your credit, and Prepaid Credit Cards can play an important role in doing just that.
Here are six steps that you can use to turn your bad or non-existent credit into good credit:
1) Get a checking and savings account. Banks and credit agencies like to know that you have both. A checking account shows them that you have the tools you need to pay your bills, and a savings account shows them that you are thinking toward the future.
2) Get a copy of your own credit report. If you are new to the United States or are young you may not have a credit history on file. If you have had problems with credit in the past, those issues will probably be on the report. All of the three major credit reporting agencies - Experian, TransUnion and Equifax - will provide you with your credit report free and on-line. Just search Google for "credit report" and find one that's free and with no hidden charges.
3) Make sure all of the personal information on your credit report is accurate and complete. You may find that some of the basic information is incorrect, such as your phone number, address or Social Security number. Review all of the basic information on your report, and if you find errors correct them by writing to the issuing credit bureau.
4) Read your credit report carefully and correct any errors in account information. Credit reports often contain errors - accounts that aren't yours, or old and out of date information. You can dispute these errors in writing to the credit bureau that issued the report Make sure these are correct - if they're not, send a written request to the credit bureau that issued the report and have them correct it. Dispute anything that is incorrect or looks suspicious.
5) Apply for a prepaid credit card. Prepaid or "secured" credit cards work just like secured loans, and you can get one regardless of your credit history. The issuer of a prepaid credit card will require you to deposit a small amount of money into an account, and then they will issue you a credit card with a spending limit close to your deposit amount. Shop for your prepaid credit card on-line - you can compare offers, find the best one for you, apply and gain acceptance all on-line.
6) Use your new credit card responsibly. Only charge as much on your new prepaid credit card as you can pay off each month. Make sure you pay your bill on time all the time. Once you have shown a willingness to do that for twelve months or so, call the credit card issuer, make sure they are reporting your good performance to the credit bureaus, and request an unsecured account.
Bad or insufficient credit can haunt you at times when you need the trouble the least. Using the steps outlined above you can begin today to establish good credit so that it will be available when you really need it.
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