So your credit score is awful. All your creditors have closed your accounts and you can't get approved for anything that requires a credit check. Life is hard and it seems like there is no end in sight. It's tempting to forget that there is such a thing as credit worthiness, but your good credit becomes more important every day! You can't even get a decent job in this day and age without a reasonable credit score so you would be well advised to start focusing on improving that dismal credit rating right away!
The one thing that's great about a credit score is that its more a flow variable than it is a stock variable (my economics teacher would be so proud). My point with that statement is that your credit score reflects your credit worthiness right now. If you take steps to improve your credit worthiness, then you can start rebuilding your credit right now! The only thing worse than bad credit is no credit. That's why letting your bad credit lie dormant for lengthy periods of time will make it even harder to recover your score. The best way to improve that score is to begin (all over again!!!!) to establish a good payment history as soon as possible. There are many different options out there for people just like you and I that have less than desirable credit scores. A quick google search for "secured credit cards" will turn up most of those options, but since I have some recent experience I'll point out the two that I found to be best.
The secured card I chose was a Public Savings Bank secured card. I liked this card because there is only an initial setup fee and a $25 fee to increase (or decrease; although I have no idea why anyone would do this) your credit limit. There is no annual fee and your credit line is whatever amount you choose to deposit. This card overall is not a bad choice because when you've recovered your credit and you're ready to get a big boy credit card you can cancel the account and they'll send you back all the money you deposited (not including setup/credit line increase fees). Also, the company began reporting to the credit bureaus quickly and had a near immediate impact on my score. The downside, however, is that the bigger banks like Chase, Bank of America, or American Express don't know who in the world "Public Savings Bank" is and as such don't consider it to be very meaningful.
Another secured card that I recommended to a friend ended up being (in my opinion) a much better choice. That happens to be the secured card from Capital One. Since Capital One is a much more recognizable name, this card would be thought of more highly by other banks like the ones mentioned earlier. They too report your payment history regularly to all three bureaus and will have a quick impact on your credit score. One big reason that I think this card is better is that if you pay this card on time and never go over limit on this card for six months or so, they can and often do increase the limit without another deposit. To state this more clearly, if you deposit $400 and keep the account in good standing for long enough, they will often raise the limit an amount they see fit. Lets assume they increase it $200. Now your limit is $600 with only $400 being secured. If you maintain this account in good standing for a good while, they can and will convert it to an unsecured credit card like a traditional credit card that we're all familiar with. This would no doubt be looked upon much more favorably by the other banks and would (I think) result in a quicker recovery to your credit file. The downside with this card is that it does have annual fees. I really feel strongly though that the increased speed of effectiveness would overshadow the $39 annual fee plus you have the possibility of this card being converted into one without an annual fee.
So, in conclusion, don't quit! Your credit won't fix itself. The longer you wait to take steps in the right direction, the longer its going to be until your credit score is good enough to buy the car you've been wanting but couldn't get approved for or closing on the house of your dreams. Begin reestablishing your good payment history and start the process TODAY!
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