Rebuild Bad Credit Using Prepaid Debit Cards
Applying and getting approved for a credit card is difficult for a person with poor or bad credit score
. Credit card issuers are a bit hesitant because they think it would be risky to approve your application since you have a bad credit history. Is there another way to improve your credit rating?
One way is by applying for a prepaid debit card. Prepaid card issuers do not conduct credit check so anyone can get approved easily. Since prepaid debit cardholders are not given a credit line, issuers do not have to worry about the risk of defaults.
In fact, even those who are unemployed or are still looking for a job can get approved for a debit card. Students who want to build an early credit history can also get a prepaid card without questions. Sending money to your kids in college is never a problem if you have a prepaid debit card.
Prepaid Debit Cards and Bad Credit
Prepaid credit cards can be used for both establishing credit history and rebuilding bad credit. There are many prepaid cards to choose from, so take time doing you own research and comparison. Choose a prepaid debit card that will report your payments to the major credit bureaus.
Acquiring your own prepaid credit card is a step towards credit improvement. Before signing up check the following pointers:
- go for one with reasonable charges
- go for one that best suits your needs
- go for one that will report to the credit bureaus
Can you really control your spending by using a debit card? With a prepaid debit card, you are inclined to become more cautious of how you use the available cash in your account. You can deposit only a limited amount of cash in your account so you'll know exactly how much you spend on purchases for the entire month.
Unlike credit cards in which you can use as much as you want, until you reach your credit limit, a debit card requires you submit a deposit first before using it for purchases. Credit cardholders often spend more than what they can afford to pay at a later time. There are instances wherein cardholders exceed their credit limit. As a result, they are charged with high interest rates, late penalty fees and over-the-limit fees.
While some people may frown at thought that prepaid debit cards do not extend a credit line, this exact limitation can actually work to your advantage. It can help you exercise better control over your spending and manage your finances more effectively.
Yes, using a prepaid credit card, you can finally rebuild your credit history one step at a time. As you use your prepaid debit card for shopping or paying bills, you are slowly making improvements in your credit score. After six months of consistent use, you should have made a significant progress in your credit history. You can then qualify for regular credit cards that good to excellent credit rating.
Copyright (c) 2009 Tara Tiemann
by: Tara Tiemann
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