With new regulations and stricter lending standards, consumers are finding it harder to be approved for a credit card or loan these days. Despite the challenge of getting approved, there are ways you can open a new line of credit even if you have been rejected previously. You might have been stopped by poor credit, stemming from a lack of credit history or damaged credit, but there is hope to repair your credit and improve your financial standing.
Here are ways to establish or fix your credit:
Apply for a Secured Credit Card
The advantage of a secured credit card is you have a higher chance of being approved for this type of card compared to a regular credit card. When applying for a secured credit card, you will have to likely pay a minimum deposit that will usually then become your credit limit. You cannot spend more money than currently is on your account, which will keep spending in check.
Obtaining a secured credit card is a good option for you if you are trying to rebuild your credit or just starting a credit history. First, you should make sure the issuer of the secured credit card reports to all three major credit bureaus. To get the most value out of this card, you should make some purchases each month and pay off the balance of the card on time. After having a secured credit card, banks may allow you to qualify for a regular credit card with a higher credit limit.
Check for Credit Errors
There are instances where credit errors may hold some consumers back from qualifying for a credit card or loan. In this case, you should request your credit file from one of the three credit bureaus and look for any mistakes that may impact your credit worthiness. These include any missed or overdue payments or even fraudulent charges that were made by someone else.
Pay Your Withstanding Debts and Credit Card Balances
With the effects of debt on your credit score in mind, you should ensure you are paying all your debts – whether they are credit card bills, student loans or car payments – in a timely fashion. Having a credit history that shows you make payments on time will raise your ability to be approved for future lines of credit. Not only will paying off the total balance on credit cards improve your score, you will also save money on interest.