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May 11, 2006
Re-establishing Your Credit Rating
Whenever you fall off the track, your credit rating gets bruised. If you want to be considered a good risk, you have to work at reestablishing your credit rating. One way is to get a secured credit card and make your payments faithfully. A secured credit card is one that is fully secured, meaning there's no risk to the credit card company. What you do is provide the credit card company with enough cash to cover your balance. Financial institutions typically want twice the amount of credit you're asking for. So if you want a credit card with a $500 balance, you must put up $1,000 in cash. After you've made regular payments for about a year or so, the financial institution will drop the security requirement and return your deposit.
Banks and financial institutes are forgiving and want your business however they also need to trust that you will repay your debts. It is important to avoid a debt over-burden especially with rising energy costs.
Let's face it, the cost of living is going up and wages are not matching the rise in day-to-day expenses so approach debt with caution and factor in what it really costs to make ends meet and plan your credit and loan applications accordingly.
It's as simple as "wait until next week to determine if you really need it" before applying for any credit.
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