Can Credit Cards Rebuild a Credit Score?
Credit cards can help rebuild a credit score if a secured credit card is used to start building a better credit score. Show credit reporting agencies that you are making an effort to rebuild credit with advice from a financial adviser in this free video on credit cards.
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My name is Matt McKillen, and I'm with Innovative Financial Group. The question posed to me today: Can credit cards be used to rebuild a credit score? And I have to answer that question: Absolutely, yes. I've had clients that have had very severe financial difficulties. They then end up filing Chapter 7 or personal bankruptcy, and 90 days later, they've wiped out all their credit cards. They have no credit established whatsoever, and they want to try and achieve the dream of buying a home down the road. You know, maybe two or three years down the road after the bankruptcy. Well, there are certain types of credit card vehicles out there that can help expedite that process. Now, it's going to be very hard for you, having a bankruptcy for example, to go out and get an unsecured credit card. There are certain types of credit cards out there that are called secured credit cards. The way that works is that the bank holds a certain amount of money in, like, a savings account on your behalf. You maybe have to send them 500 dollars -- whatever you want your limit to be, you have to send the cash. Then what happens is they'll issue you a credit card. They know their money is safe because they're holding your money in a savings account, which they do pay you interest on, and it gives you ability to start using a credit card and having these payments start reporting to all three of the main credit reporting agencies. So absolutely, if you've went through some troubled credit and you're looking to rebuild your credit, always seek out a secured credit card even if it's a 200 dollar high credit limit as a way to start building your credit scores back in order to be able to take advantage of the higher scores and borrowing money under more favorable terms in the future. Again, my name is Matt McKillen, and I'm with Innovative Financial Group.