Bad Credit Card – What is It and How Do You Clear It?

What exactly are bad credit cards? What exactly makes one "bad" In the first place? A bad credit card is in fact a negative credit card rating. What is a credit rating may you ask? A credit rating is a form of "credit score", in which uses a form of mathematical algorithmic calculations to calculate a person's "credit-worthiness". This method of scoring is usually conducted by consumer reporting agencies or credit bureaus. Money lenders usually rely on these ratings to ensure one is eligible to be given a loan.

The credit rating of a person will show whether a person is capable of paying back a loan or other credit obligations. The higher the score usually means a person is more capable of paying back. It's pretty simple, take for example; a person with a credit rating of 750 is highly likely to pay back his or her loan as compared to someone with a credit rating of 300.

So how does one acquire a credit rating so low it's labeled a "bad credit rating", also known as adverse credit history? For one, inability to pay back your credit transactions and delaying the payback of any form of credit obligation can cause your credit rating to decrease because the creditor will report these instances. One's credit rating can be calculated by referring to the amount of outstanding credit against the amount owed, your credit and payment history, types of credit, how long you've had credit and so on. Repeated offences can also lower the rating.

The next question should be, "So how do you clear bad credit?" Although there never really is one simple step to completely banish bad credit, there are steps you can follow to eliminate it slowly. First thing you should be completely aware of is this: To err is human, and that even creditors can make mistakes. So do request for a copy of your credit report from a consumer reporting agency or a credit bureau and to review it to make sure there aren't any errors. If an error is found, you may either contact the bureau directly or to contact your creditor first as they will contact the bureau on your behalf. The next step is to take note of your debts and to pay them back! If you find your debts to be too much to handle, contact a credit-counseling organization in your area, as many of these organizations are in fact non-profit, get them to set up a debt-consolidation plan just for you. They can even contact your debtors on your behalf to reduce or eliminate finance charges, and this is a tremendously important step in helping you lower your credit score.

The next best thing to do is to close your credit accounts! So cancel your accounts and cut up those plastic cards. Try to clear your debts as soon as possible, whether you'd have to sell of some your valuables or liquidate your assets, DO IT! Stick to buying what you need instead of what you want in order to save enough to pay back. Just remember this: Once your debt has been paid, a great burden will be lifted from you. Remember to pay your bills and mortgage promptly every month and try not to build-up debt as that is what put you in that bad situation in the first place, in order to acquire a cleaner credit history once more.

A credit card rating may seem like something to put us down but it is actually an aid to ensure credit is calculated without any prejudice and is calculated fairly. Just remember to always clear what you've purchased as soon as possible and to not spend out of your means.

Source by Stuart Michael M

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