I cut up and cancelled my credit cards before starting credit repair, was that a mistake?
Yes and no. There is certainly nothing wrong with simplifying your life. And there are many wonderful benefits to eliminating debt. But from a credit repair perspective you would have been better off holding on to two or three credit cards even if you have decided to live as debt free as possible.
The FICO credit scoring model needs open and active accounts to develop a score for you. Revolving credit is especially valuable for credit repair because of the amount of weight that it carries with your credit score. The credit cards you closed could have been valuable tools in your effort to build your scores. In addition, the older a credit card, the more valuable it is for your credit repair effort. Having said that, what is done is done, and it is not difficult to build new credit to take the place of the cards you cancelled, so don’t feel bad! If you take the right steps now you will be back on your feet before you know it!
Secured or Unsecured Cards
Building new credit is easy, but the path you take will depend on your current credit. If your credit is sufficiently impaired you will need to open secured credit cards. Since you are starting your credit repair program with no cards at all you should get two new cards in order to have enough activity on your report to see a significant score benefit. Secured cards are easy to get, they are inexpensive and you won’t get denied. If your credit is not too bad you might be able to get regular unsecured cards.
Use Them Right
While we are on the subject of new credit I should mention that your new credit cards are a very powerful credit repair tool. But they must be managed right. Two new cards can improve your scores by over 100 points within six months, or they can send your scores into a downward spiral. To get the full credit repair benefit it is imperative that you make your payments on time and keep you balances low. Ideally, you should only use 20 percent of the available limit on the card. Do it right and great results are assured.