Rebuilding Your Credit

In addition to a bad credit car loan there are other ways in which you can begin to rebuild your credit and raise your credit score.

In addition to an auto loan

At Auto Credit Express, we specialize in matching customers with damaged credit to car dealers that specialize in bad credit auto loans. But in addition to rebuilding your credit with a car loan, there is at least one additional way that you can raise your FICO score and, just like a car loan, it involves reestablishing your credit. But this time, we’re not talking about installment credit. By applying for and using a credit card correctly, you can reestablish your revolving credit.

Secured card

A secured credit card is the easiest type of card to get for just about everyone – and that includes people with no credit history. The lenders (they’re not always banks) that issue these cards require that you set up a savings account with them. Your credit limit is the amount of money you deposit in the account. Although this may not seem to make sense – after all, why couldn’t you just keep the money in your purse or wallet – it eliminates the need to carry around cash and the chance that it could get lost or stolen. Just like cash, you use the credit card for purchases and the amount is subtracted from your credit limit.

The advantage over a debit card is that the Visa or MasterCard logo on the card allows you to use it at most businesses, just like a regular credit card. The other advantage to a secured card is that the lender reports your monthly payments to the credit bureau, helping to establish or reestablish your revolving credit.

Since a number of banks offer these cards, you should shop around for the best deal. If you can, try and qualify for one that has the lowest monthly rate and lowest annual fee. Another tip is to try to qualify for one from a lender that has a program that will allow you to convert the card to an unsecured credit card after a certain length of time, provided you have made timely monthly payments.

Unsecured card

Unlike the secured card, an unsecured credit card requires no savings account to secure your charges. As with the secured card, you should shop around to get the best deal on interest rates and other fees and charges (read the fine print carefully, because of upcoming legislation, many credit card companies are boosting many of these so-called “hidden fees”). Also check the fine print on the agreement to see if the lender will charge you to increase your credit line, once you’ve established a solid payment history.

Boosting your credit score

Your credit score will initially drop slightly after you have applied for a card, so be sure and limit the number of cards you apply for and accept. Either pay off the balance each month or keep the running balance at no more than 30% of the credit limit. By doing this, you will steadily raise your credit score. Remember: making timely payments will raise your credit score, but maintaining balances of more than 30% of your credit limit tend to drop them slightly as well as raise flags with the credit reporting agencies.

The Bottom Line

By establishing or reestablishing your revolving credit and keeping your balances under control, you can improve your credit score.

For more information on the ability of a bad credit car loan to reestablish your auto credit (and your installment credit) while raising your FICO score, visit our web site at

Posted on October 23, 2009 by in Used Cars
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