Build Or Rebuild Your Credit Rating With Credit
For someone that has never had credit before
or has had credit difficulties in the past, obtaining credit anew
could prove tricky. So the thought of being able to build or rebuild
their credit rating with further credit could seem like a bit of
a catch 22 situation.
One of the most important factors that lenders look for when considering
an individuals application for credit is their ability to manage
credit responsibly. In the case of a loan this would simply mean
making the required repayments on time. With a credit card this
means using the credit card and once again making the required repayments
on time in accordance with the terms of the credit agreement.
By conducting a credit search this information is readily available
to a prospective lender and is used when making a decision to lend
or issue credit.
Quite clearly some form of credit is required in order to be able
to manage it responsibly and as aforementioned never having had
credit or having had problems in the past could make this difficult.
All is not lost. There are lenders and credit card companies that
will still consider an individual even if there is either no history
of previous credit or an adverse credit history.
There are in fact a choice of credit cards available designed specifically
for helping people rebuild their credit rating. In the UK there
is a choice between the Capital One Classic Visa, the Barclaycard
Initial, two offerings from Vanquis Bank and the Aqua Credit Card
from SAV Credit.
As the name suggest, the Barclaycard Initial is also ideal for people
who are just starting out with credit for the first time.
One potential downside to the availability of credit cards for rebuilding
credit is the higher interest rates charged. The reason for this
is simple. The credit card companies either have no way of knowing
if you are going to manage your credit responsibly or if you may
develop further credit problems and so charge a higher rate of interest
as an incentive for you to repay the money and not leave a high
balance outstanding.
What s more is like most credit cards, these offer an interest free
period on purchases so if you pay your balance off in full every
month you will not have to pay any interest charges at all.
Through continued responsible spending and repaying you can quickly
start to rebuild your credit or demonstrate to lenders your willingness
to adhere to their terms and conditions.
But beware people with good credit ratings are often bombarded with
further offers of credit and find themselves biting off more than
they can chew so the key to maintaining a good credit rating is
to always try to stay well within in your means and be responsible
with your borrowing.
Written by Tim Day for creditmarket.co.uk a UK personal
finance directory including information and resources relating to
credit
reports and bad
credit credit cards.
Credit Resources
Manage My Credit -
a website devoted to providing advice on managing your credit and debt
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