You may not have too many serious defaults but if your credit report is bad then you will have to improve it before considering a mortgage refinancing. The cost of borrowing is higher if you credit score is low. Using fair credit can help improve your credit report.
Remove Errors Before Applying for Credit Cards for People with Fair Credit
You must understand the reason for low credit score before applying for a fair credit report. Every American citizen is allowed a copy of his/her annual credit report when requested, based on the Fair and Accurate Credit Transactions Act. According to the Federal Trade Commission (FTC) the only website, annual creditreport.com, is authorized to take requests for free credit reports. Analyze your report for any discrepancies in loan applications, credit limit or incorrect spelling. The information provided in the report can help you plan the steps need to improve your credit score. If you need extra assistance then find a credit repair attorney to help you with the process.
Using Credit Cards for Fair Credit to Fix My Credit Report
The issuers of fair-credit cards report to TransUnion, Experian and Equifax every month. This allows you to improve your rating every month, this accelerates the entire process of fixing bad credit rating. Each punctual repayment will enable make refinancing more affordable.
Credit Utilization Figures for Fair-credit Credit Cards
Fair-credit credit cards should never be maxed out. It is not enough to settle the outstanding every month, if you use the card excessively then it results in higher credit utilization. Credit utilization is compared with the credit limit of the card to determine the level of debt you are in monthly. So if you have a low credit limit and your spending is high then you will be considered to be under high debt and vice versa. Maintain this ratio when trying to repair your credit score.
Liz Pulliam-Weston of MSN Money recommends that utilizing 30% or less of your credit limit will result in better scores. You can get even better results by reducing the spending to 10% and settling outstanding balance completely every month. Utilize two or three cards for different purchases. If you have any old unused credit accounts then use them for your expenses. By spreading put the expenditure you can maintain the required credit utilization. It is not recommended to close your existing credit card accounts as they will affect your score.
Will Fair Credit Score Credit Cards Really Help?
Timely debt repayments are the guaranteed solution for improving your credit rating. Unfortunately, there are absolutely no shortcuts. Don't wait for the 7 year period to improve your score, start using the fair-credit credit card and slowly you will be able to repair the damage done to your credit history and improve your credit score as well. Once you are back on track you will be eligible for affordable refinancing of mortgage and even save money in the process.