James Mahony

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Anyone who has ever had a credit card, paid a monthly bill, or taken out a loan has a credit rating. Whenever you have a service, or otherwise owe money to a creditor, the creditor reports to a credit reporting agency that compiles a credit report for you. If you start missing payments on a credit card or loan, or -- worse -- your creditor sends one of your outstanding debts to a collection agent, a negative mark will go on your credit rating, which will often prevent you from getting credit in the future.

If you find yourself in this situation, it is imperative that you take steps to repair your credit rating as soon as possible. Although it seems like a daunting task, if you do nothing your credit rating will remain the same for up to seven years, causing you all sorts of hassles, and preventing you from obtaining any type of loan.

An important step in credit repair is the acquisition of a secured credit card. Generally, if you have bad credit, you will be turned down for any credit card application. This puts you in a bind, because without a credit card you have no way of improving your situation by proving to creditors that you can pay your bills on time and responsibly.

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To engage in credit repair, you should look into what is called a "secured credit card." This is a credit card marketed specifically to people with bad credit. Generally, these cards work by requiring an initial deposit that is equal to your credit limit. In other words, if you make an initial deposit of $500, you will have a credit limit of $500. The issuer will then reserve the right to use your deposit against any outstanding balance on the card if payments are not met after a certain amount of time.

As you can see, this type of card carries no risk for the issuer (because they can always use your deposit against the balance - you'll never end up "owing" them anything), and therefore can be freely issued to people with bad credit. Unfortunately, most of these cards will have yearly annual fees that regular credit cards are often free of.

Once you have a secured credit card, you can engage in credit repair by using it sparingly but regularly, and making sure you make all payments on time. By doing this you will slowly repair your credit. What you will be doing is demonstrating to creditors that you are responsible and can be trusted with credit.

If you don't take steps towards credit repair by doing things like getting a secured credit card, your credit rating will effectively remain in a static state for years. Credit reporting agencies will keep any marks on your credit report for 7 years, so unless you are willing to wait that along, it is imperative that you take the necessary credit repair steps. By obtaining a secured credit card and using it responsibly, you will be able to reduce the 7 year wait period before being offered credit again.

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Free Credit Repair Guide Credit Card Approvals

About the author:

James Mahony is the founder of Free Credit Repair Guide - A Guide Free Guide to Credit Repair and Credit Card Approvals