Nick-GajewskiIn my last blog post (before Thanksgiving) I wrote about predatory lending practices and how to avoid them.  In preparation for the upcoming new year and a fresh start, I’d like to share some helpful lending and credit practices that can help you build your credit.

Three Major Steps

Apply for a secured credit card

A secured credit card works just like a regular credit card.  You can make purchases, you have to make payments on or before your due date, and the balance will earn interest if you don’t pay it in full.  The main difference is that the card limit is equal to the amount of money you pay in as a deposit when you open the account.  If you don’t make payments, the company will take your deposit to cover the charges.  When you close the account, you’ll get your deposit back.  However, these cards aren’t long-term solutions.  Secured credit accounts are meant to be short-term to help you build your credit to a level where you could qualify for better terms.

Find a bank or lender that offers credit building loans

A credit building loan is designed to help both the borrower and the lender.  Typically, the lender holds the money that you borrow in an account and pays itself from the money in that account.  The lender will report that loan to the credit bureaus as an on-time payment in regular intervals, thereby helping to boost your credit rating.  At the same time, the bank can reflect the loan in its own books as an account that is paying regularly.  The borrower gets a credit boost and the lender gets to look good for potential investors and shareholders.

Avoid opening too many accounts at once

Try not to do this even if you think you can afford all the accounts.  The average age of your accounts plays a part in determining your credit score.  You may think that opening many accounts would look good since you’re paying on so many separate things, but it can actually have the opposite effect.  Even though you may want to diversify your accounts, stick with just a few accounts that you can keep open for as long as possible.  The lengthy credit relationship that you have will reflect positively.


At Bond & Botes, we focus on helping people find a solution to financial difficulties.  Filing for bankruptcy relief is often one of the quickest and most effective ways of cleaning up bad credit or delinquent accounts that are hurting your chances for future good credit.  We offer free initial consultations with our experienced attorneys at each of our convenient locations in Alabama, Tennessee, and Mississippi. Contact us today if you’re facing financial trouble and need some help getting back to stability.

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