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Credit after Debt Management

February 15, 2011 by Shawn

After a credit card debt settlement, it may take several years to reestablish your credit, but taking it slowly is probably the best option anyway. The following are some general tips to rebuilding your credit.

1. Obtain Secured Credit Cards – A secured credit card is one of the most effective ways to get creditors confidence back up. Since the amount deposited is considered the consumer’s credit line, it is easier to get approved for this type of credit.

For example, if the consumer deposited a $1,000 amount, then their credit line is also $1000. Another advantage of a secured card is you can deposit more funds to increase your credit line.

2. Store Cards and/or Gas Cards - A store card or a gas card is not hard to acquire but it usually comes with very small credit limits. Even though the credit limits may not be large, it isnot advisable to use more than 50% of the credit line on the same purchase.

3. Savings - It’s a must for the consumer to open a new savings account to break-off the bad habit of relying on credit cards for simple purchases. Once a consumer has successfully opened a new savings account, there must be an effort to deposit into it monthly. Having savings is critical to obtain the credit you need for important purchases like a new home.

4. Payments on Time – Of course making your payments on time every month is the most critical function for rebuilding your credit. If need be consult with a credit card debt relief service for help consolidating your bills.

5. Make Sure to Not Have Any Extra Credit - Lenders hate seeing large unused credit lines. The worry is that if a consumer has too much unused credit and they are applying for more they could be gearing up for a large spending spree. After all, why apply for more credit if you already have some available?

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