Being approved for a credit card can be difficult without a positive credit history working in your favor. It's a Catch-22: To obtain a credit card you need a good credit history. But to have a good credit record, it must establish good credit!
This no-win cycle can maintain people with no credit history, limited or negative you are approved for a credit card. But if you do not have to understand the type of credit cards available and how to build a good credit history.
When it comes to credit cards, the card type of request is based on your situation. If you a student, you, of course, to sign a student card. But if you are a student with no credit history or bad, a card that is secured or obtained with a co-signer may be your best option. With co-signed credit cards, the co-signer guarantees and is responsible for the debt. This means that the co-signer is responsible for paying the full amount of the debt if the cardholder does not pay. In fact, the debt when co-signed enters default, three out of four times co-signers are made usually to pay what is owed, according to the Federal Trade Commission.
In addition, the bank may try to settle the debt without first seeking the cardholder. The bank can also use the same collection methods against the co-signature, in particular to sue and garnish wages. If the debt is not paid, may leave a negative mark on the credit history of the co-signer, and the cardholder.
Despite the risks, a co-signed credit card can be a great tool to help a friend or relative build their credit history that may one day obtain a card on their own. Secured, co-signed and valid credit cards offer viable options paid. But you should start building a solid credit history, so you can get a credit card regulate on their own in the future.
First, we must understand how credit card issuers determine creditworthiness. The criteria approval varies from issuing banks, but generally refers to what is often called the three Cs of credit: capacity, character and collateral. Capacity refers to your ability to pay based on your income and existing debt. Warranty applies to any assets you have that can secure payment, such as bank accounts or home ownership. Character refers to factors like your payment history, length of employment, etc.
For a good idea about how your application fee with credit card companies review your credit history with a major credit bureaus: Experian ( www.experian.com target = "_blank">), Equifax (www.equifax.com) and TransUnion (target = "_blank"> www.tuc.com). These agencies access to payment information directly from the companies that have credit with, so as government agencies such as the legal court system.
The credit reporting agencies use the information in your credit history for determine your credit rating or credit score. Credit scores, also known as FICA or Beacon score based on the CRA usually ranges between 350 and 850. Most banks approved for credit if they score at least 620. If your score is 720 or more, banks offer the lowest interest rate.
In general, and our credit score is determined by your payment history over the past two years. T echnically, CRAs calculate your score using a closely guarded formula. TransUnion, for example, determines credit scores using a variety of factors, including: how to pay your bills, how much and how often should you have applied for credit.
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