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Credit Score Increased. Are You Ready for a New Credit Card?

Posted on December 30, 2010

There comes a time in every credit repair saga, that you have to ask the question, “Am I ready for a new credit card?” Disputing negative information will only take you so far. If you want to take your credit score to the next level, you’ll need to add some positive information to your credit report. One of the ways to do this is by getting a new credit card and using it responsibly.

Before you go fill out a new credit card application, you have to make sure you’re actually ready for a new credit card. If you get one prematurely, you could undo all the credit repair progress you’ve made so far.

Do you qualify for a decent credit card?

There are some credit cards out there that will approve you no matter what your credit score looks like. However, these aren’t the type of credit cards you need. These “subprime” credit cards target people with bad credit and make cardholders pay dearly with high annual fees and interest rates.

Is your credit score good enough to qualify for a credit card that doesn’t have high annual fees and has decent interest rates? An interest rate between 14% and 20% is expected for someone who’s trying to rebuild their credit score.

Can you save up a security deposit?

If you can’t qualify for a credit card with good terms, you’re not out of luck. You can apply for a secured credit card. This is a credit card that requires you to first make a deposit against the credit limit before you can get the credit card. To get a secured credit card you need to have between $300 and $500, plus any upfront fees the credit card issuer requires.

If you don’t have a security deposit saved up right now, you can start putting aside some money every month until you get enough for a security deposit. You can save a $300 security deposit in a year by making $25 monthly contributions to a savings account.

Do you have the discipline to pay your balance in full every month?

Credit trouble starts when your credit card balance gets too high for you to pay off in a single month. Not only to you need the discipline to pay off your balance each month, you need the self-control to keep your charges low enough that you can pay them off.

A good idea is to keep your credit card balance below 30% of the credit limit. But, even that may be too high to pay off in a single month. You can try using your credit card to pay off a bill every month – a bill that you’d be paying anyway – then use that money to pay off your credit card balance.

Can you pay your bill on time each month?

On time monthly payments are the key to building a good credit score. It’s not enough to pay off your balance each month; you need to make sure your payments reach your credit card issuer on time. Don’t cut it close. Aim to get your credit card payments in a few days ahead of time.

When you get a new credit card, think of it is a fresh start, a second chance to rebuild your credit. Use it wisely.

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