Simple steps to improve your credit score with a prepaid mastercard

October 6th, 2011 | Posted in Credit Card Debt

In the current economic climate, more and more people are dependent on borrowing money whether it be a short term loan, extending you overdraft facility or applying for another credit card. If you have a bad credit rating, this can make all the above options non-existent. Borrowing money is even more difficult these days and having a poor credit rating due to missed payments, bankruptcy or CCJs can make life impossible for some people.

Something that many do, which in fact makes the situation worse, is continuously applying for credit and getting declined. The constant application for credit, especially if you are applying and you have already been refused by other lenders makes life even more difficult for yourself in the future. If you have been refused credit, the only other option may be to turn to the sub-prime market which isn’t the most ideal situation as the interest rates you will be charged are through the roof. If you feel as though you are heading for this unfortunate circumstance, then read below on ways to help you revive your credit rating without resorting to extreme methods. One of the first things you can do is contact a credit reference agency, such as Experian or Equifax, and determine your credit score and then take the necessary procedures to rectify your credit.

There are several straightforward actions you can undertake to start off with. A basic measure such as registering on the electoral roll at your current address seems quite trivial but will seriously help your credit rating. Other steps you should take are making sure that there are no errors on your credit file, such as somebody else’s debts or payments; making sure that all your balances owed are registered to your correct name and address and lastly, close any expired credit agreements that are no longer in use. There are other things to look out for when applying for credit – for example, lenders like to see that you have consistency in your life such as a permanent address, long term employment and a long history with the same bank. All of these factors will determine whether you are a suitable candidate for credit.

Once you have contacted the credit reference agencies and determined the state of your credit file, you can begin to re-establish your credit rating. One of the most successful ways of doing so is to invest in a prepaid credit card. These prepaid cards work in a similar way to credit cards but minus the hassle of having to apply for credit cards and then get rejected. Because there is no lengthy application process, you can buy these prepaid cards instantly online or in shops, load it with money and then use it like a normal credit card.

Prepaid credit cards are a great way to build your credit rating as these prepaid cards feature special benefits for those you are in need of help in the credit department. You sign up for them and then pay a monthly fee for twelve months and these payments are noted down and then sent to various credit reference agencies that will see that you are making payments on time. This will prove to them that you are handling your money management sensibly, responsibly and are credit worthy. Over time, using these prepaid credit cards will definitely improve your credit. There are several types of prepaid credit cards on the market so spend some time researching which one will best suit you.

If you are one of those unfortunate people who have never had credit but have still been turned down, then don’t worry as you are not to blame. Creditors feel more secure dealing with people who have had a previous history of successfully paying off credit. So those who have taken out a loan or have mortgage payments are more likely to be able to apply for credit than those who haven’t. To build a credit file from scratch, think about purchasing a prepaid credit card as you can use it to make regular payments and hence re-establish good credit. It’s as simple as that!

This author is a consumer products analyst, focusing in bank cards and personal finance. He recommends downloading a free 36 page guide called the ‘Essential Guide To Your Money‘. For more information, visit the prepaid credit card website.