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Home » Re-establish Credit

Re-establish Credit

A major component in the credit repair process is to re-establish new credit. Many may think this is almost impossible, not true. There are many companies that are in existence mainly for extending high risk credit. This will come at a price and that should be temporarily accepted, due to the past credit situation.

The bright side is these costs will not be long lasting, as long as the process is followed and financial limitations are kept inline. The credit scores are an indication of potential default and strength in managing debt

Credit Sources after Bankruptcy

Some sources that grant credit will be a catalog sales house. The reason they grant credit to some higher risk applicants is the interest rate and the cost of the products are higher than most. After proving to this creditor you are a better risk, they may grant you more credit and lower your interest rate so they do not lose your business. Make certain the company you create an account with reports to the credit agencies. If you need any help locating one such company, please just ask.

Next will be a secured credit card, these are usually banking institutions. An individual is guaranteeing this credit line with a savings deposit. The cost is the application is about 35-40 dollars and the credit line can be as much as 100% of your deposit. These interest rates are typically a little higher than most but not unreasonable. These applications for credit are usually granted due to the securing the credit line to the savings account. If a payment get neglected the savings is used to pay the debt. You may add funds to your savings account, the result is the credit line increases as well. Exercising this option will benefit credit with the balance to ratio calculation.

There are a few credit grantors who will offer a unsecured line of credit to those who have demonstrated some credit issues. These creditors will also charge a fee and grant a minimal credit line. For example, a credit line of 300 dollars and a processing fee of about 75 dollars that is charged against your credit line. In this example, the balance would be 75 dollars and credit line balance of 225 dollars with a minimum payment of 10 dollars. After an individual demonstrates a positive payment history and no abuse of this credit, an increase of the credit line will be added.

In every new extension of credit, apply the rule that was explained in understanding credit, the balance to limit ratio. When you start to re-establish credit, you may want to consider monitoring your credit. This is a service that notifies you when an inquiry has been made of your credit file. Monitoring is offered through a number of online sources, this will also protect you against identity theft. If you would like recommendations do not hesitate to ask.

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