Many young adults in the U.S. are relying more on credit cards to meet their daily routine expenses and desires. But depending more on credit cards can lead to people accruing huge credit card bills and incurring debt. However, there are several viable ways to waive off the obligation, such as debt consolidation. Youngsters are always asked to consolidate debt to eliminate the financial burden, but they are mostly reluctant about it. Thus, they not only fall further into debt but also suffer from poor credit scores. However, credit scores can be refurbished by following a few simple tips. So here are some unique tips for how young adults can rebuild their credit scores.
Get a store card:
The most important way to repair your credit score is to get a new credit card and use it in prudent ways. But since you have poor credit, you may not be approved for a credit card. So apply for a store card or gas card. A store card is a card that borrowers can use to buy goods on credit from a particular store or group of stores. Use the card within limit so that you can afford to pay the bill on time. However, the credit limit offered on this type of card is generally low. But do not be disheartened. Your credit limit may get increased if you show a responsible attitude towards the card and pay the bills on time. Once your credit limit is increased to a substantial amount, you can successfully improve your credit score and fix it as soon as possible.
Obtain a secured credit card:
Obtaining a secured credit card is also a great option for young adults to reestablish their credit scores. Many of them who have a good steady job have enough cash on hand but little or no credit history. For them, a secured credit card can be a great remedy. A secured credit card is a type of card backed by a savings account as collateral on the credit limit available with the card. So if you decide to put $500 for a deposit, this will be your credit limit. That means in the event you should default on bills, the balance will be covered by the deposit made. Therefore, this card will always let you stay current on your payment and hence, will improve your credit score.
Have good credit discipline:
Whether you obtain a secured credit card or a store card, pay the bills on time. If possible, try to pay more than the minimum towards the credit card bills. This will not only help you pay off the debt but repair your credit score as well. If you can maintain an outstanding balance of less than 10 percent of your credit limit, you will likely earn points towards your credit score.
Use credits you have:
After you open multiple accounts, make sure you use them from time to time to keep the accounts active. In this regard, the thumb rule is to use each account once every six months. But use them within limits and purchase goods that can be financially covered. The trick of this process is to project you as a responsible consumer. Staying current on the accounts will be reported to the credit bureau and thus, will leave a positive impact on your credit report.
About the Author: This is a guest post by Barbara Delinsky who is a financial writer of Oak View Law Group. Through her articles she helps people to get answers to their questions regarding their personal finances. She also gives advice to consolidate debt and to live a debt free life.
Category: Startup Advice