If your credit history is less than stellar, or if you have never established a history, many banks will not issue you a credit card. However, there are cards available that can enhance your score. When choosing a card, be sure to select the best credit builder credit cards available. If used wisely, these cards can help you establish credit and/or improve your credit score. These cards are available to a wide range of potential customers and provide the opportunity to build or reestablish credit in order to qualify for mortgages or other loans. With prompt and regular payments, it can take as few as six months to achieve a higher credit rating. Due to the less-than-perfect or non-existent credit rating of many customers who apply for these cards, it can be expected that higher interest rates will be charged; sometimes much higher rates. Therefore it is important before applying for these cards, that you are certain you will be able to make the minimum payment each month. An even better plan is paying off the entire balance each month.
What Kind Of Cards Build Credit?
A retailer credit card or gas station card. Use the retailer card to purchase modest items such as furniture or a television. These cards are typically easy to qualify for and will help build your credit score if you make timely payments. Before applying for any of these cards, first determine that the retailer will report your card and payments to the three major credit reporting bureaus. Ask your credit union or bank to issue you a secured credit card. With this type of card you make a deposit to the card's account and you are issued a credit limit in an amount equal to the deposit. This allows you to build your credit slowly. Again, be sure the bank or credit union will report your payments to the credit bureaus.
Use Co-Signer!
Use a co-signer when signing up for one of these cards. The lender will issue the card based on the co-signers' credit rating. This is essentially having the co-signer guarantee the card while you build credit. If you do not make the payments, it becomes the responsibility of the co-signer, and could potentially damage the credit rating of the co-signer. This is a good way to build your credit rating, but remember it is a big responsibility and could have extreme consequences for the co-signer if you default.
Students Use!
For students, becoming an authorized user on a parent's card is another possible avenue for establishing credit. A concept known as "piggybacking" allows the credit rating of an authorized user to benefit from the good credit rating of another family member.
Overall Thoughts!
A credit card is a good way to build or improve your credit rating. However it also comes with risks and temptations. If you know you have difficulty budgeting or limiting your spending, the best credit building credit cards for you will be one with a low limit. And whenever possible, the entire balance should be paid off each month. This allows room for emergencies without exceeding your credit limits and further damaging your credit.
I hold a college degree in Business Finance. I have also worked in the Financial Industry for 15 years. I want to use my knowledge and experience to help others find the right products for their needs.
What Kind Of Cards Build Credit?
A retailer credit card or gas station card. Use the retailer card to purchase modest items such as furniture or a television. These cards are typically easy to qualify for and will help build your credit score if you make timely payments. Before applying for any of these cards, first determine that the retailer will report your card and payments to the three major credit reporting bureaus. Ask your credit union or bank to issue you a secured credit card. With this type of card you make a deposit to the card's account and you are issued a credit limit in an amount equal to the deposit. This allows you to build your credit slowly. Again, be sure the bank or credit union will report your payments to the credit bureaus.
Use Co-Signer!
Use a co-signer when signing up for one of these cards. The lender will issue the card based on the co-signers' credit rating. This is essentially having the co-signer guarantee the card while you build credit. If you do not make the payments, it becomes the responsibility of the co-signer, and could potentially damage the credit rating of the co-signer. This is a good way to build your credit rating, but remember it is a big responsibility and could have extreme consequences for the co-signer if you default.
Students Use!
For students, becoming an authorized user on a parent's card is another possible avenue for establishing credit. A concept known as "piggybacking" allows the credit rating of an authorized user to benefit from the good credit rating of another family member.
Overall Thoughts!
A credit card is a good way to build or improve your credit rating. However it also comes with risks and temptations. If you know you have difficulty budgeting or limiting your spending, the best credit building credit cards for you will be one with a low limit. And whenever possible, the entire balance should be paid off each month. This allows room for emergencies without exceeding your credit limits and further damaging your credit.
I hold a college degree in Business Finance. I have also worked in the Financial Industry for 15 years. I want to use my knowledge and experience to help others find the right products for their needs.
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