Quite A Few Facts To Assist Consumers Regarding Building Credit Scores

Years ago, getting a loan was a simple as walking into a bank with a firm handshake and a smile. However, the unfortunate reality is that due to non-payment of loans, banks had to begin being a bit more strict about which consumers they would give loans to. This has lead to what we know these days as the Fico rating system. It is no secret that these days, people who have good Fico ratings can easily get a loan or charge card account and that Americans with bad Fico scores have a hard time getting anyone to loan them a stick of bubble gum. With that said, if you are one of the several consumers that have bad or limited/no credit scores, chances are you are looking for ways to improve your credit rating.

As I researched this topic, I came across quite a few blogs that tell Americans that they should go about a slow and steady process to build their credit. Many of these articles tell consumers that they should take out a cell phone or utilities bill and wait the 3 or 4 years that it may take to build your credit. However, many consumers don’t quite have 3 or 4 years to wait. When it comes down to it, if you are like most people, chances are you want to build your credit within 2 years or less. What if I told you that Americans could build their credit within 12 months?

Well you can! When it comes down to it, I have found through my research that the fastest way to build good Fico ratings is through the use of secured credit card accounts. Secured charge card accounts are specialty charge card accounts designed for Americans with bad or limited/no credit scores. Before using a new secured charge card account, people must first place a security deposit with the bank. This security deposit will then become the credit limit that people can use on their charge card. So, essentially, when using secured charge cards, consumers are borrowing their own cash which alleviates the bank of any risk associated with loaning cash to that consumer.

The key here is using the secured charge cards properly. If Americans use their new secured credit card properly, after about 12 months, their security deposit will be returned and their secured credit card will then become an unsecured charge card account. They will also notice that their credit scores will have improved exponentially! With that said, here are a couple tips for people to help with using secured charge card accounts properly:

Tip #1: Don’t spend too much: It is important to remember that building credit is all about showing signs of financial strength. With that said, people who are facing financial hardships tend to spend more than 50% of their credit card account spending limits. Therefore, to show signs of financial strength, it’s important that Americans keep their credit card balances below 50% of their credit limits.

Tip #2: Don’t make minimum payments: Another thing that people should remember when using charge card accounts is that the minimum payment on a charge card account is the minimum amount of cash that banks will accept as payments on debts. However, this is not the maximum amount of cash that Americans should send. It is a best practice when building credit ratings to at least double the minimum payment on charge card accounts.

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Author: StevenMartinez

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