You might think who cares? Why even bother boosting credit after a repossession? Immediately following the repossession you are probably right, but moving forward a year or two later perhaps you might be looking for a new job or you feel you are ready to purchase a house. Whatever the reason might be, a surefire way to increase credit scores is getting a secured credit card. Not a prepaid MasterCard but a secured credit card from a bank like Capital Bank. Not Capital One bank, but Capital bank.
Capital Bank offers a card called First Bank Card that you must load a minimum of $300.00 at a time. But to boost your credit since you haven’t had anything but some negative accounts floating around for the past year or two a $300.00 secured card will do. In fact if you do a good job with it, they might even change it over from secured to unsecured shortly after. You submit the application online with an electronic way of them getting the starting $300.00 or you print out the online application and send them a money order along with the printed application filled out and signed. The whole process takes around 20 days to get done, typically 10 days for an approval and another 10 days to receive the card. Consider it a small savings account that must be watched over like a hawk.
The key to building the credit back after repo
Use the credit card each and every month, however the way you use it needs to be understood and planned out to work best. Never max out the card, use around 30 to 40% of the max value and either pay it off completely each billing cycle or leave a very small amount of around 10% as a balance. This should work wonders for your credit and perhaps give you the boost needed to get that new house or cheaper insurance. In the very first month shortly after the billing cycle they will report and some people are noting that the credit can increase as much as 70 points or more after being in a drought for so long. As the credit continues to rise, the higher it gets the tougher it will be to increase on a larger scale so they key here is to raise the limit on the card, or even get a second card from a different bank. Sometimes you might want to try even your local checking bank and ask if they can do a secured card for you.
Apply to secured cards only is very important
If you are in the middle of getting approved on a home loan, it is important to go for only sure fire ways. Even though you might approved on a certain un secured card, my advice is to stay away for now as the application for that card will lower your credit. At least with the unsecured card, it will be approved and go up allot more than down. It could be that you are only 20 points away from approval with your mortgage company so the last thing you want to do is start applying for cards with each one hammering down your hard earned points with a 50-50 shot at approval.
Increase limit as often as possible by adding funds
You want to increase the limit as you go so that you do not hit any plateau along the way. By adding funds, increasing the credit limit, this gets reported and essentially has a greater effect on raising the limits higher. Think about it, if you are showing a card for $300.00 that you are using half of each month it will give you that boost you might need if you are looking for a lower point boost, but if you looking to get your credit back into the 700 range, it will take a couple of cards probably over the $1-2k range each. If not it will just take much longer to get a higher boost.
So there you have it, if you have a repo on your credit and a year or two down the road need to increase that credit score from a 525 to the 600 fair range or better, getting and properly using a secured credit card will help your end credit ratings.