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You have bad credit. Your credit score is low. You need to reestablish credit to raise your score. No one will give you a second chance because of your low credit rating. It’s a Catch-22 scenario. Sound familiar?
What do you do when nobody will give you credit? I am going to assume that if you are reading this article, this may be your particular problem. Reestablishing credit is difficult at first but it is obtainable for anyone, and I do mean anyone. Listed below are some tips for you to follow. I operate in the Dallas Fort Worth area so some of the creditors may not be available to your area but I think you will get the general idea of how to get credit and make the climb out of subprime.
What if your credit score is below 675?
You are now migrating to the subprime credit market and you will still get credit offers but with double-digit interest rates and higher administration fees. You will be solicited by numerous creditors. You will still be easily approved by creditors such as Capital One. Paying your bill on time, every time, will increase your credit rating and the ultimate goal is to get your score back above 700 to enjoy the better rates and terms. Staying clean in this arena with low balance-to-available credit ratio's will raise your score and promote you to the higher tier rating.
What if your credit score is below 620?
Now you are in the higher-risk category and you will be limited on who will even offer you credit terms. You will still be available for a car loan through most of the big automaker B-lenders such as Nuvell Credit or Drive Time Financial. The rates will be significantly higher. You can get unsecured credit cards with banks such as First Premier, Orchard Bank, Capital One and Household Bank. You will be paying higher fees, premiums and annual charges but they do report to all 3 credit bureaus, so keep those payments on time and stay clean. Certain national stores will still offer credit still such as Target, Wal-Mart, and Old Navy but they will keep your available credit low, to around $200 - $300, and the penalties for missed payments will be significant. The average rate for those store cards is around 21.99% APR.
What if your credit score is below 580?
You are in the HIGHEST RISK pool. Everything you do will be closely watched. About 90% of this countries creditors will not lend to you. Because of your score, you are now defined as 20 times "more likely" to end up in collections than the average consumer. The banks who will extend you credit will command the highest legal interest rates and they will keep you on a short leash. There is very little leniency shown in this category so MAKE THAT PAYMENT ON TIME or you will be immediately turned into collections and shunned from anymore second chances. Those creditors who are willing to even help you reestablish credit include: First Premier, Aspire Visa, and Prime Mutual. Proceed cautiously.
What if your credit score is below 560?
Chances are you will not be extended credit without posting your own money as a security deposit against your new account. This may include the same lenders in the previous category but now they may require you to put up $100 - $200 as a deposit and application fee. But this is better than a debit card which does not report to any bureaus. If you have no good credit and want to rebuild, this is the price of admission to get back in the game. Again, having no credit or reported positive trade lines does nothing to improve your score and only hinders the credit recovery process.
What if your credit score is below 550?
It’s very difficult to get anyone to help you here. I am aware of only one credit card, New Millennium Bank who will open you a secured account without even performing a credit check.. I think this may be your only resource when your score gets this low. However, they do report to all 3 bureaus. You will pay a higher premium and additional fees to even receive the card. When everyone else says "No," they still say "Yes." Their credit offer may be the only chance to get bureau-reported credit for some consumers.
More Tips
Other local creditors operating within the Dallas, Texas area who have more lenient approval guidelines and who will often extend credit to those who are attempting to rebuild their credit rating include...
Conn’s Appliance
Friedman’s Jewelers
Joe Daiche's Credit Jewelers
Fingerhut Catalog Store (Online)
Justice Finance Company
Remember: OTET
Translation: On Time Every Time. If you start to reestablish credit and cannot make and keep the creditor commitment to pay the minimum monthly payment without fail, you are doing yourself a great disservice and just plummeting yourself deeper into the black credit abyss.
Note: If you know of another creditor you would personally recommend, please leave a comment at the end of this article. I will update the list periodically to help others who are trying to reestablish credit and get another chance. Thanks.
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