A credit card is pretty much a necessity these days and, if you are a victim of bad credit, it can also be a great tool to repair your credit. Use it the wrong way though and it will damage your credit rating further so let’s look at the best way of how to use a credit card to repair bad credit and understand the potential benefit to your credit file.
Check Your Credit File
You may know why you’ve got a bad credit rating but it’s always a good idea to check your credit file and check that the information held is accurate.
There are three main credit agencies in the UK today, all of who will keep credit records on you that are made available to any potential lender every time you apply for credit. To learn how to check this information read our article on credit repair >>>
Make Sure You’re Listed On The Electoral Role
The electoral register is a list of everyone in the UK who’s over the age of 18 and eligible to vote. In order to obtain any form of credit you’ll need to be accurately listed so make sure that you are registered at the correct address otherwise you’re not going to get any credit from anyone.
Choose Your Credit Card
There are hundreds of different credit cards available today, each offering different terms, benefits or appeals. It could be a card linked to your bank account, a cash-back card, low interest balance transfer, a charity card or even a card linked to your favourite football team! The choice is incredible … if your credit rating is unblemished! If you have a less than perfect credit history or if you are new to credit and don’t yet have a credit history then you may struggle for one of these main-stream credit cards and may have to elect for a specifically designed credit card for bad credit. Credit limits may be lower, interest rates higher but, used correctly can really be an effective means of credit repair or building a good rating.
Apply For Your Credit Card Honestly
There’s no point in lying – fill out the form in complete honesty but don’t forget that the card provider will want to say yes and, if you’re applying to one of the many bad credit card providers, they’ll expect your credit rating to be poor so don’t pretend otherwise.
Stick Within Your Credit Limits
You’re bad credit credit card will likely not have a very high limit to start with – it will be increased over time as trust is built but, whatever level it’s set at initially, make sure that you don’t exceed your limit at any time but that you’re seen to work responsibly within the limit.
Check Your Statement
You’ll be given a statement each month, either by post or electronically, it’s your responsibility to check that it’s accurate so inspect it carefully each month and make sure you agree with all the transactions and know exactly where you stand financially each month.
Pay On Time
The statement will tell you how much you must pay as a minimum and a date you must pay by. Make sure you stick to this schedule and always pay on or before the due date. Always be aware that any payment you make may take a few business days to reach your account so pay in plenty of time.
Pay As Much As You Can
Don’t think you should only make the minimum payments – pay as much as you can, ideally pay the whole account off each month if you possibly can. Using a credit card and paying it off in full each month is a fantastic way of optimising cash flow. Credit companies don’t particularly like it as they don’t make much money … shame 🙂
Prove You Can Manage Your Money Responsibly
So, if you were wondering how to use a credit card to repair bad credit, just follow the golden rules: check your credit file, use a credit card wisely, pay above minimum levels on time each month, prove you can manage credit wisely and you’ll soon see credit limits rise and your credit rating improve and that’s exactly what makes a credit card for bad credit a great way to help repair your credit.