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How to Recover From A
Bad Credit Rating Report

With a growing rate of house foreclosures, spiraling credit card debt, and even bankcruptcy, millions of Americans find themselves in the same predicament.

That is, how to regain a solid financial footing and get back into the good graces of lending banks and credit agencies.

As dire as it may seem when you first find yourself strapped for credit, bouncing back from a bad credit rating may, in fact, be easier than you think.

Apply for a Secured Credit Card

The quickest way to regain your good standing is to begin rebuilding your credit history, starting from scratch. A secured credit card will almost immediately get you back on the road to full financial recovery, albeit slowly to start, and eventually get you upgraded to a regular credit card within a year.

This solution is based on the assumption that you already have $200 - $500 to keep in your bank account as security against default. Hence, the term "secured credit card" — if you don't pay your bill, the credit card issuer simply takes what you owe from your bank account.

Secured Credit Cards Are Not All Alike

Not all banks or credit card issuers offer the same advantages to consumers looking to rebuild their credit standing. For the best deal, be sure to look for the following before you apply:

• An attempt at restoring a good track record will remain in neutral unless the three major credit bureaus - Equifax, Experian and TransUnion - are aware of it. First, ask your bank if the card issuer reports to all three agencies before you apply.
  
  
• Does your new card convert to an unsecured card after 12-18 months of on-time payments? A solid payment history often will result in an upgrade to a regular credit card in about 12 - 18 months..
  
  
• Reasonable annual fee and NO application fee. Avoid greedy card issuers who may charge exhorbitant fees for helping you regain your financial freedom. As with any product or service, it always pays to shop around.

Pay It Back on Time and Without Fail

In short, a secured credit card may be the best investment you'll make for quickly reestablishing your good name IF you follow the rules.

Keep in mind that your card is a test of your new-found creditworthiness, so maxing out a secured credit card is always a bad idea. Experts advise keeping charges down to a minimum of 40 - 50 percent of your available limit while you regain your financial footing.

Paying the bill in full every month is not necessary. Paying-off the monthly charges - and on time - remains the cardinal rule to prove that you're no longer a credit risk.

More about recovering your good credit standing:

'Last resort' cards can provide a fresh start - Expert overview with related tips & advice at this two-part feature from MSN Money.

Featured Credit Cards for Consumers with Poor or No Credit - One-stop browsing for issuers who offer secured credit cards, with reviews and information on related rates and application fees, from CreditRatings.com

National Foundation for Credit Counseling - Where to find free or low cost assistance for debt management and bankruptcy, online budget & mortage calculators, related resources.

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