Credit After Bankruptcy - Tips To Boost Credit Score

Establishing credit after a recent bankruptcy is very important. For the
most part, many consumers acquire excessive debt because of using credit
irresponsibly. Hence, after a bankruptcy is discharged, many people are
hesitant to obtain new credit accounts.

However, opening new credit accounts is the first step to rebuilding credit.
Low credit scores are common following a bankruptcy. This makes it difficult
to obtain a mortgage, auto loan, etc. Here are a few tips to help you
increase your credit score and re-establish a good credit history.

Understanding the Usefulness of Credit Scores

If you are hoping to make a purchase using credit, credit scores are
essential. Prior to obtaining any sort of credit, lenders must assess a copy
of your credit report. In some cases, lenders simply review your three digit
score. This is practical when approving an applicant for instant credit.
Those with a low credit score are at a disadvantage.

Following a bankruptcy, you can expect your credit score to nosedive. Thus,
it is important to take the necessary steps to improve your credit standing.
Bankruptcy does not last forever.
However, you must put forth the effort to boost your credit and prove your
creditworthiness.

Avoid Repeating Past Mistakes

If bad credit or bankruptcy occurred because of using credit unwisely, learn
from your mistakes and move forward. Many young adults acquire an excessive
amount of debt. In some instances, they do not fully understand how credit
works.

If you are drowning in debt, bankruptcy may be the only alternative. If so,
avoid making the same mistake twice. Sadly, there are individuals who file
bankruptcy repeatedly. However, rebuilding credit takes time. Once you are
on the path to increasing your credit standing, avoid bad credit decisions.

Establish New Credit Accounts

The only approach for establishing new credit is opening new credit
accounts. At first, this may sound scary. However, this maneuver is
necessary to quickly increase credit scores. New credit accounts may consist
of a major credit card, store credit card, automobile loan, etc.

Secured credit cards are very effective and easy to qualify for. These sorts
of credit cards require applicants to have a down payment. However, it's
well worth the fee. Once you have obtained a new credit card, attempt to do
three things: make timely payment, maintain low balances, payoff the balance
each month. By doing so, each month your score will increase. Soon, you will
qualify for an unsecured credit card. Within 24 months, you may also qualify
for a mortgage or auto loan with a comparably low rate..

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How To Deal With Credit Card Mail Offers

If you are annoyed by the constant credit card junk mail that you receive,
then you are not alone. People all over the country are receiving literally
dozens of credit cards offers every year, most of which are misleading or
not applicable to them. If you want to know how to deal with these credit
card mail offers, then here are some tips.

Why get so many?

Whether or not you have a lot of credit cards, you get sent so many offers
because of your specific credit rating. Whether you have a good or bad
credit rating depends upon the types of offers you get, but whatever your
rating you are a target for credit card companies to be sent offers. Some
people will receive nearly 10 of these offers every month, many of them
duplicates.

Bait and switch

Although some of the credit card offers you get might seem tempting, they
usually not what they seem. Most of these offers employ the technique known
as 'bait and switch'. This is where you will be offered a great deal in the
mail such as ' you are pre-approved for a credit card with up to £25,000
limit', but when you fill in the paperwork and send it back you only get
£1,000 at an incredibly high interest rate. This is not illegal because they
only said 'up to' a limit and so even if they had refused you it would not
be against the law. This technique may not be illegal but it is clearly
immoral. This is one reason why you should avoid such offers.

Opting out

Although it isn't the easiest thing to do, you can attempt to opt out of
receiving these mail offers. There are companies that you can apply to that
will help you to be removed from these mailing lists, although you are still
bound to receive some offers. You can always try calling the credit
companies themselves and asking them to stop sending you mail, although this
usually falls on deaf ears.

Keeping your identity safe

Even if you don't want to look at any of the offers you get through the
post, it is important that you properly dispose of the offers you get. If
you simply throw the offers in the bin, then someone could take them and
apply to the cards you have decided not to look at. Before you know it you
could get a bill in the post for thousands of pounds for a card you didn't
even apply for. Make sure you shred or tear up all credit card mail offers
to protect yourself from identity theft.

Don't dismiss them all

Although most of these offers will not be worth looking at, you shouldn't
simply throw them all in the bin. There really are some genuinely good deals
to be had from credit card mail offers. This is especially true if they are
from a company which you have a card with, as they might offer you
preferential terms. If you are careful with credit card mail offers and can
separate the good from the bad then they will be a benefit to you rather
than a constant annoyance.

About The Author: Peter Kenny is a writer for creditcards-gb Please visit us
at http://www.creditcards-gb.co.uk and
http://www.thriftyscot.co.uk/Credit-Cards/

Low Interest Credit Cards - Scam Or Benefit?

Low, as low as zero, interest on a credit card sounds attractive. Who
wouldn't want to borrow money and pay it back at leisure with no 'penalty'?
But what sounds like honey can often be laced with bee droppings.

For those with excellent credit it is indeed possible to obtain a card with
a comparatively low interest rate. Rates as low as 5% are still possible,
though likely not for long. (9%-15% is more common, which is still good for
credit card debt.)

For those with less than stellar credit, a low interest rate offer is more
likely going to be one with hidden clauses.

Look for caps on amounts charged or transferred. Some offers allow the low
rate only on transferred amounts. Other contracts specify limited periods.
(6-12 months is common, 15 months is
possible.) After that time, the low interest rate automatically switches to
the normal APR on any remaining balance.

What is an APR? And what constitutes 'excellent' credit?

APR is an acronym for Annual Percentage Rate. Suppose you charge $100 and
the APR is 12%. Does that mean you pay $12 in interest for the year?
Probably not. The APR is divided up into a monthly rate, 1% per month, and
applied EACH month to ANY outstanding balance.

How good your credit is depends heavily on your FICO score.
(FICO is a number calculated by a secret algorithm that takes into account
total outstanding debt, number and length of late payments, and other
factors.) That number, along with an analysis of your credit report,
containing age, length of credit history, kinds of debt, etc, determines how
the card issuers view your credit worthiness.

For those who pass the 'good credit' filter, there are multiple criteria to
consider.

Do you pay off your entire balance due when the bill arrives?
If so, the APR is irrelevant since companies almost always forego applying
any interest at all. (Note: They're not required to. Technically, interest
charges begin from the date of purchase, not when the statement is created.)

Do you use the card to make large amount purchases, or accumulate large
balances in one month? If not, the difference between a low interest rate
and the normal APR is usually insignificant.

Most low interest cards have 'fine print' limitations. These include limited
time periods, after which the APR increases, caps on credit amount, etc. One
low interest card type, the 'balance transfer', often limits the rate to the
amount transferred. Interest on any new charges are calculated at the normal
rate.

Also, keep in mind that cards actually have more than one APR.
One rate applies to normal purchases, another to cash advances, etc. Read
the contract carefully.

For those tempted to accept the low or zero interest offer, intending later
to switch to another when the offer expires, a word of caution. Switching
cards frequently can harm your FICO.

Every time you apply, a credit report is created and analyzed.
Your FICO is partly dependent on the number of those credit checks
performed. Also, your score is influenced by the length you have held a
particular card. Many cards acquired in a short period is a red flag.

For those with genuinely good credit (680 or higher, in conjunction with
other factors) a low interest card is a deserved reward for responsible
behavior. Most are free of annual charges. And, if you maintain a monthly
balance on a substantial amount, these cards can save you a significant sum.

About The Author: Did you like this article about low interest credit cards?
Mark Williams offers other great tips and advice about credit cards at his
website http://www.abc-of-credit-cards.com