How do I go about re-establishing credit? Pre-paid card?

Hey there Red Phoenix fanamaniacs!! Many of you have asked me how to get new credit after you've been through the credit beat down or filed bankruptcy. The big deal that everyone flocks to is pre-paid credit cards! Easy to get, easy to use and you get a shiny new card with money to spend on it! SORRY, NOT A BIG FAN OF THEM AT ALL! WARNING, WARNING! What is about to happen; because of a law suit many of the pre-paids may not even report to the bureaus. It looks as though they are going to be viewed as a ramped up pre-paid debit card which is not fair to establish credit. Fun fact or truth is they can hurt you more than help you and it doesn't take long for it to happen. Figure your typical card, you give the bank $300 to get $300. How long does it take before you're owing $200 or more? Not very long! Factor in 18-22% interest, add the fact you're way over 30% of your available balance and now you've just hurt your score by about 30 points or better. OUCH!! YOU'VE JUST CRUSHED THE PURPOSE OF THE CARD!! So what do I do to get credit, car loan or something? Car loans are okay, if you need a car and want a good amount of debt. There are however a couple banks that offer credit re-builder loans of some sort. Nothing that is going to get you in trouble again or give you huge monthly payments. What they do is give you a small affordable installment loan. Installment loans are the best way to increase your credit score and build your credit, and it's fixed so you know what your getting. Small steps go a long way to getting back on track, you don't want to try and take on to much at one time. Eventually adding a credit card will be a good idea, mix of credit is important as well. As always before you do anything take the time and read the terms and agreement section. Know what you are getting yourself into, if you feel it's not the right time, just wait. Rebuilding credit doesn't happen overnight, same as fixing it but you need to get started. If you don't have the time to do it, ask for help. If you need me, I'm always around....

john@redphoenixco.com