Rebuilding Credit Can Be Blood, Sweat and Tears


Rebuilding your credit can be a long and arduous undertaking. Things happen in life. People make mistakes; illnesses catch one unaware, and catastrophes, both natural and manmade, occur with annoying frequency. David Rothburg learned about illness up close and personal. At only 45 years old, David expected to have many years of productive work ahead of him. He had worked as a foreman in construction for most of his adult life. David was blessed with a wife, Heather, and three active, growing children.

Last St. Patrick's Day, while at work, he noticed a heavy, pressing pain in his chest. He didn't pay much attention, construction workers strain muscles every day. However, when he started gasping for breath and his chest pain advanced to excruciating, co-workers rushed him to a nearby hospital. The ER doctors fought valiantly. They saved David's life.

Unfortunately, he could not go back to construction work and he did not have disability insurance. New bills arrived every day. The stack of past-due notices on the dining room table continued to grow at an alarming rate. For the first time in their married life, the Rothburgs could not pay their bills. Their credit score began a precipitous downward spiral. David worried constantly about their future. He didn't know what to do or to whom he could turn.

Sadly, variations of the Rothburgs story are numerous and widespread. When one finds himself or herself in debt, it is time to sit down, get a comfortingly rich latte (don't worry, McDonalds has them now) and thoroughly analyze the situation. Sometimes a few months of belt tightening can resolve the issue. However, when the debt is serious and the credit score plummets resolute counter measures are required.

Believe it or not a credit card may be part of the solution, thought we normally think of credit cards as a temptation to indulge. Guaranteed credit cards are available for individuals no matter how dismal their credit score might be.

You are, as the name indicates, guaranteed approval. Perhaps, you are asking yourself how banks can afford to be so generous. These cards are more closely related to checking accounts than credit cards. You deposit money into the credit card account and you use credit while your deposit sits in the account.

Bank Cards to the Rescue

No, I have not lost my mind (it is just a vicious rumor). These bank cards can help you in a number of ways. First, you can begin to rebuild your credit score. The bank cards most useful for this purpose report to the three major credit bureaus (Equifax, Experian and Transunion).

Second, you cannot be turned down, thus you know immediately that you were accepted. Now, "cannot be turned down" has some qualifiers relating to age, perhaps, income and where you live. Third, you have the convenience of a credit card. Fourth, you can use your statements to keep a close eye on your expenditures. It is easy to spend much more than we realize. Your statements can be a valuable resource for tracking tax deductible expenses.

How It All Works

Even thought you set up a reserve account as part of your agreement with the lender you pay monthly payments. The lender does not remove money from the account unless it becomes necessary. Monthly payments are paid just as they would be on any credit card.

Payment histories are reported to credit bureaus. The lender can say, with strong conviction - you are paying your account as scheduled. Of course, the other side of the coin means -- uncomplimentary reports are made if payments are not timely. This would harm rather than enhance your credit score. The amount you deposit is usually 100% to 200% of the limit on the card. Some cards may offer a more munificent deal. Always compare.

What to Compare

Guaranteed credit cards come with various benefits. Compare the benefits to find the card that meets your exacting standards. Compare:

  • What is the credit limit?
  • Does the lender report to one or more credit bureaus (which and how often)?
  • Is there a rewards program?
  • How much is the APR?
  • How long is the grace period?
  • Is there an annual fee?
  • How much is the late fee -- just in case?
  • How much is the ATM fee?
  • Is there an application fee?
  • Is there an introductory offer?

As you see there is much to compare and much to learn. If you find the credit card you just love, apply online.

There are other things you can do to repair your credit it. Read 10 Hints for Pumping Up Your Credit Score.

OpenSky® Secured Visa® Credit Card

OpenSky® Secured Visa® Credit Card
Rating: 4.5 out of 5
Intro APR: N/A*
APR: 19.14%* (Variable)
Annual Fee: $35*

Surge Mastercard® Credit Card

Surge Mastercard® Credit Card
Rating: 4.0 out of 5
Intro APR: N/A*
APR: See Terms*
Annual Fee: See Terms*

ABOC Platinum Rewards Credit Card

ABOC Platinum Rewards Credit Card
Rating: 4.5 out of 5
Intro APR: 0%*
APR: 14.40% - 24.40%* (Variable)
Annual Fee: $0*

Total VISA® Credit Card

Total VISA® Credit Card
Rating: 3.5 out of 5
Intro APR: N/A*
APR: See Terms* (Variable)
Annual Fee: See Terms*

Green Dot primor® Mastercard® Gold Secured Credit Card

Green Dot <i>primor®</i> Mastercard® Gold Secured Credit Card
Rating: 4.0 out of 5
Intro APR: N/A*
APR: 9.99%* (Fixed)
Annual Fee: $49*

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