Now let’s look at these variables shall we…
We’re told to not apply to too many credit card companies…what’s too many? What is the cut-off number before the amount of inquiries on your report become “too many”? At one point if a person had four inquiries in one month it was a mark against them- I guess you have to play the odds with this. How many people with “bad” credit land an account with a low interest, low-to-no monthly (or annual) processing and administrative fees? Uh, can you say none?!?
Okay and let’s really talk about rebuilding credit with a department store credit card…didn’t I just say that we’re supposed to avoid high interest fees? Well department store credit cards may have an introductory interest rate that is low but please understand that after the introductory period your interest rate is going to skyrocket through your roof…and right now you can’t afford that repair cost either! The same applies to gas cards- and nowadays it’s rare to find an oil company that will extend credit to someone with “bad” credit…besides, you’re supposed to be avoiding bad habits and we both know that this may be a stickier situation than you would want to admit.
With secured credit cards things sound simple don’t they? Not so. Secured credit cards are often-times initiated through your credit file before you can use your own money as collateral. Yes, you read that right…you’re putting your money on a card which you’re supposed to pay back to yourself (technically), while having on-time payments reported to the credit bureaus; but before you can set up this arrangement your credit report is checked and if you’re not deemed “credit worthy” your application can be denied. Additionally, you have to do your homework and make sure that just like other credit cards, your secured card does not have high interest rates, administrative fees and processing costs- all of which eat up your money.
What if after all the research and submitted applications you’re told that you’re not credit worthy for any type of credit card, not even the super duper high interest “bad” cards, what do you do then? I didn’t want to ask my close associate what they would do if after all the time and effort they invested they got another door slammed in their face…I didn’t want to seem like a sourpuss.
Goodness, with all of this nonsense you might as well pay a visit to some type of financial advisor (who won’t charge you an arm and a leg) who can walk you step-by-step through the process of re-building your credit; and for heaven’s sake don’t trust any so-called assistance program that has a hand-written sign (or any sign) on the side of the freeway/highway or street! Please be leery of the hundreds of credit-repair companies you see advertised in just about every publication, online, and on the radio and television.
I will let you know how my associate fairs with this dilemma as they inch their way one day at a time towards home ownership.