How many credit cards should you have to rebuild credit?
Wednesday, August 5th, 2009 at
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How many credit cards should you have to rebuild credit?
I am trying to rebuild my credit after ID theft, a couple of problems that were mine and years of basically not having any credit reported. (I primarily use my debit card and pay cash for everything). I make good money now and am trying to rebuild in order to purchase a condo in the next couple of years. My good accounts (rental, club, cable, cell, etc.) have not reported my good credit. So how many cards should I take out that will help boost my credit score but not hinder my credit. Thank you!
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I do not know of a single credit card that earns you interest on a credit balance. That doesn't mean there aren't any. Good luck finding one, but I'm not sure that will count a lot to establishing credit worthiness.
Before creditors lend money, they need to be assured that the funds will be repaid. In other words, is the prospective borrower creditworthy?
How to Establish Credit
Begin by opening individual savings and checking accounts in your name. Over time, your deposits, withdrawals, and transfers will demonstrate that you can handle money responsibly.
Applying for a loan is another option, but be aware that this method of establishing a credit history will cost, since loans require the payment of interest.
You could take out a bank loan secured by the funds you have on deposit or by items you own, such as a car. You could also ask a friend or relative who has good credit to cosign a loan, which means that he or she shares liability for the loan with you.
You could also apply for department store and gasoline credit cards, which generally are easier to obtain than major credit cards. Before you apply for any credit, however, make sure you understand the terms. For example, how long is the grace period or the time you have to pay the current balance in full before finance charges are added? Is there an annual fee or other fees associated with the credit? If you believe that you will carry a balance, you need to know how finance charges are calculated.
Patience is important in this process. It takes time to establish credit and build a record of consistency in making payments to demonstrate your creditworthiness. And it is much better to go slowly and develop a strong credit record than to apply for too many credit cards or a loan that is larger than you can handle.
Start slowly, be cautious, keep track of your overall debt, and pay on time. Most importantly, remember that credit actually represents real money and has to be repaid with interest.
Yes, it is true. Having active credit cards on your record is no problem. It shows that card issuers are willing to extend credit. If these cards have no balance on them, you should have no trouble getting a new card. Apply and start using it.
If there are balances on your other cards, it is a different issue. You should pay them off, or transfer them to the card with the lowest interest rate and pay that off as quickly as possible. Then make sure you never have a balance on a card that exceeds about 30 percent of the credit limit.
Paying the monthly charges in full each month is the best policy. It also means not paying any interest.