Posts Tagged ‘credit rating’
Whether as a business user or a consumer, choosing the right credit card can be extremely confusing. There are so many options out there and it may be hard to work out which one is best for you. I’m a firm believer in people getting a credit card as soon as they can, as long as it is used properly. If they are regularly paid off, it can do wonders for your credit rating, making it easier to get a home loan or car loan.
The purpose of this article is to help you wade through the confusion and find out which card is best for you if you are only going to use it minimally and in emergencies.
Those credit cards with the best reward offers- If you are only a small user, and you will pay your credit card off each month, then the interest rate on the card you choose should not be too much of a concern. You should look at what other opportunities and offers you can receive for signing up to a credit card- this could be that they have the best rewards program for your life or it could be that a particular credit card offers you discounts or special offers at stores where you often purchase goods. This would be more useful to you.
Those cards with a small limit- You don’t need a big limit on your card if you are only a small user, otherwise the temptation may become too high and you may decide to live beyond your means and purchase things that you do not need. There is nothing wrong with running up the entire limit each month as long as you pay it off at the end of the month. Don’t get a big credit limit unless there is a reason for it and you can afford to easily pay it off each month.
Those cards with the longest repayment period- Male sure you pick a credit card with a long interest free period and leave paying the bill until the last minute. Why pay things back early if you can keep your money in your own pocket? If it is at all possible you want to avoid paying any interest payments.
There are hundreds of options for you when it comes to picking the right card for your personal circumstances. Following the tips that I have mentioned above may enable you to make better choices more easily.
Credit cards for bad credit are one of the best methods available to overcome your financial black marks. Having a poor score for whatever reasons can be a serious problem for individuals trying to re-gain financial stability and secure loans for mortgages or other long term financial investments. Hundreds of thousands of people in the UK suffer from negative credit ratings with 6% of the population having to make rent or mortgage payments using these cards in 2010 alone. The average UK adult has over 30 thousand pounds of unpaid debt and more than four million people missed a monthly card payment in 2010. With such dramatic figures it is not surprising that more than 10% of the adult UK population has some form of bad credit rating in their financial history. The good news is that there are credit cards for that are specifically designed to help those with poor credit ratings get back financial stability.
A poor credit history is likely to prevent individuals from getting most unsecured loans, credit cards and also will often prevent an individual from successfully applying for a mortgage. Due to the recession increasing the cost of living, prepay cards for bad credit are becoming increasingly prevalent as a means to repair ratings as they offer a number of advantages in building credit history.
Credit cards for poor scores are the best way to repair credit ratings, provided you keep up with the payments, as they show that individuals have regained control of their finances and are exercising good financial monitoring on a regular basis. There are of course downsides to using cards for bad credit which will become apparent as we discuss the pros and cons of these cards.
The advantages of credit cards for bad credit
The key advantage of cards that aim to improve your rating is that you can show a financial stability history to future creditors. This allows you to slowly improve your reputation over the course of months, or years, if you have a particularly bad credit rating to begin with. Gaining a good repayment reputation will encourage creditors to trust you with in the future and therefore you are much more likely to receive mortgages and other unsecured loans.
Other advantages of cards aimed at those with poor credit history are that they are essentially the same as those for normal cards. You get the freedom to make payments immediately for purchases and bills, and get to spend money you otherwise wouldn’t have. In this respect cards for bad credit work in much the same way to normal credit cards.
The disadvantages of credit cards for poor credit history
Cards for poor credit obviously come with severe disadvantages as the companies providing them must secure debt against the risks of non-payment that bad credit entails. For this reason cards for lower scoring citizens will typically have a very high APR (Annual Percentage Rate). The average rate is typically over 20% so if for any reason you fail to make a payment you need to be prepared for a large additional fee. The other disadvantages are that you typically do not receive any of the benefits that other cards offer which takes away some of the advantages of having a credit card.
So should I use credit cards for bad credit?
Cards for bad credit are one of the easiest ways to absolve yourself of bad credit so should consider applying for one if you are secure in your current finances and will predominantly be using it as a means to improve your credit rating; rather than as a means to support yourself or cover unpaid bills.
It may be a shock for you to hear this but there are almost 60 million American people who are not in the position to get credit. And this is why there is a tremendous need for prepaid credit cards.
Shocking no doubt, but also very true
This large number of Americans who do not meet the qualifying criteria to avail of credit mainly consists of the people who are young as well as members of minority groups and unbanked people. These people are almost always faced with one big dilemma – how do they build their credit score if nobody wants to give them the opportunity?
But, there is a solution that is offered to this and it comes from the very same companies that do not offer the people.
The solution lies in the form of prepaid credit cards
There are a huge variety of these prepaid cards that are available. These have been designed so that they can be used as per the needs of various market segments.
These cards are of real great value as they have been made just to meet the needs of those people who fail to meet the qualifying criteria for getting a regular card. Or in other cases, people who have once been eligible for applying for credit cards, but no longer qualify now as they have now lost their credit because they have defaulted in their payments and other kinds of reasons.
There are many advantages to having cards that are prepaid
Having a prepaid card is really great for anyone who does not have a regular credit card or for people who do not have any kind of a credit history or for those people whose credit history is insufficient. In fact this type of a card is also ideal for a person who has a credit rating which has been tarnished.
These types of cards are just awesome as they are a very good and highly effective way of slowly but surely building up a good credit score. Now, this is not going to take place overnight, so do not be misled. But, you can bet that, given time, if you play your cards right, this will definitely help improve your credit rating.
Also you can use these prepaid cards just like you would use any normal credit card to make various kinds of purchases like: buying things online, reserving hotel rooms, purchasing tickets for flights, etc.
Recession has left people helpless in situation where they are looking for all affordable debt relief solutions. It is because they know very well that they already are in financial hardships and in order to get rid of these debts, they will have to hire the services of some company and that is something which they cannot afford. Hence they want to adopt affordable ways to get back to their debt free lives.
When people got stuck in the pools of debts, finding no way out they started filing for bankruptcy. It is the situation where people get rid of all their liabilities in no time. On the other hand once a person is declared bankrupt his financial life is destroyed at once. He becomes ineligible to get any kind of financial aid for the next six to seven years. Moreover his credit rating becomes negative. At the same time filing for bankruptcy is not at all advantageous for the credit card companies as well. It is because in this case they lose all their money.
Hence in case a person gets under the debts of $10,000 or more then he must apply for the most affordable debt relief solutions called debt negotiation. In this method the debtor has to hire a debt settlement firm. Financial experts of the hired firm will negotiate on behalf of the debtor with the creditors. They will ask then to give reduction of half of the amount over the total outstanding amount to be paid. In case the creditors do not agree for debt settlement the financial gurus of the settlement firm threat that if they will not settle the debt then the debtor will file for bankruptcy.
At this the creditors get afraid because they know that bankruptcy will result in losing all the money. While in case of debt settlement they will be getting half of the amount back from their debtors. That is why they consider it better to settle the debt. Hence debt negotiation is the best option among affordable debt relief solutions which are working in the markets for the assistance of people under pools of debts.
If you have over $10,000 in unsecured debt it may be a wise financial decision to consider a debt settlement. Due to the recession and overwhelming amount of people in debt, creditors are having no choice but to agree to debt settlement deals.
Filing bankruptcy is quite helpful in the sense that it eliminates all the debt and saves a person from humiliation and harassment but at the same time it has a negative impact on credit score. After bankruptcy a person needs to take some drastic measures to get back a good credit score. Credit cards play an important part in this regard. If you keep using credit cards efficiently and pay back the amount owed on time then your rating will start improving. This strategy may sound ironic to a person who filled bankruptcy because of uncontrollable credit card debt but it does work wonderfully.
After bankruptcy you may face difficulty in obtaining a credit card. It is because of the overall poor economic conditions which have made lenders very reluctant to lend money to risky parties. However, if you do your homework then you can find a card company which provides credit cards to people discharged in bankruptcy. The reason why some creditors don’t mind giving cards to bankrupt people is that they can charge more interest in such cases. Another reason is the Bankruptcy Abuse and Consumer Protection Act which forces people to file a bankruptcy just once in a long period of time. For example after filing a Chapter 7 bankruptcy a person can not file again in 8 years. Similarly the time period for Chapter 13 is 6 years. This rule gives the creditors some peace of mind.
If you can not get an ordinary credit card then you can try to get a secured card. This card works in a rather strange way. The person applying for such a card first deposits some money with the provider. This money becomes his credit limit and he can’t spend more than that. So what is the purpose of this card then? One can easily use cash instead of a “secured” card. The purpose is simple: To help people improve their credit rating. If you use cash then it will have no effect on your score. Whereas if you use a secured credit card then your score will start improving.
An important thing that you must keep in mind while applying for a credit card is that if the card company turns your application down then this will have a negative effect on your credit standing. Therefore, you should never apply for a card unless you are fully certain about the company’s policy regarding bankrupt people. You can contact the company to ask about their policy. Once you are sure that the company does issue credit cards to people discharged in bankruptcies then you can go ahead and submit your application.
Bankruptcy does have its drawbacks but they can always be fixed with a little effort. Credit cards can help you a lot in getting rid of a bad credit score. If you haven’t filed a bankruptcy in Tampa and are wondering whether you should do it or not then you must talk to a bankruptcy attorney.