Credit Cards

Without a good credit report score it is going to be hard to establish a business, especially if you are going to seek funding for your business or if you are going to need to purchase inventory with a 30 or 90 day credit.

Credit cards can be used to help you establish a positive credit report score if used and not abused! Don't use your card to make purchases where you can easily use cash. Pay off your higher interest rate cards first! Try to add at least an extra $20 or $30 to those cards with a payment of $50 or more.

Your credit report score is made up of several factors including:

1. Your present income
2. Your payment record
3. The amount of credit you owe
4. The amount of credit you have available
5. The amount of "installment" loans
6. Delinquencies on your report
7. About 40 or 50 more factors, (but the main ones are above)

Credit cards can serve two main purposes for you:

1. Enable you to make larger purchases with a payment schedule.
2. Help you establish or re-establish your credit report score

Other ways to help establish your credit is through local retailers that offer payment plans. Start off with smaller purchases that can be paid over a time period of about 6 months.

Your credit report score will be slightly higher if you have a credit history of at least 3 years.
Make sure the retailer you choose reports to the three major credit reporting agencies:

Equifax
Experian
TransUnion

It's also a good practice to see a copy of your credit report at least twice a year. There are several programs that you can sign up for that will let you keep track of your credit report on a daily basis.

You want to keep the credit reported that you "owe" below 40% of your income. If you owe more than 40% of your income your credit score will start dropping.

Credit Cards Article:

Bad Credit Doesn't Rule Out Unsecured Credit Cards

by Bill Smith

Many people believe that because of their bad credit, unsecured credit cards are not available to them. While it may be more difficult, there are options for people with bad credit who want an unsecured credit card to build their credit or have available for use in an emergency. While a secured credit card is the most commonly recommended option for people with bad credit, unsecured credit cards ARE available - even for those with the worst credit.

Bad Credit: Unsecured Credit Cards vs. Secured Credit Cards

One of the easiest ways to get a credit card when you have bad credit is to opt for a secured credit card. With a secured credit card, you deposit money in a bank designated by the credit card company to serve as a 'security deposit' - an assurance that they'll get their money if you default on payments. Depending on the lender, that deposit might be equal to your desired credit limit, or slightly higher or lower. A security deposit of $300, for instance, might get you a $150 line of credit with one company, a $300 line of credit with another, and a $400 one with yet a third. The interest rate is generally competitive, since the company has a guarantee of getting its money if you don't make payments.

An unsecured credit card requires no security deposit. A bad credit unsecured credit card will often have either a high APR (annual percentage rate), high fees, or both. How do the two stack up against each other? Here's a comparison from two actual credit card offers that are sitting on my desk as I write:

Secured Credit Card Security Deposit: $250 Annual Fee: $35 Setup Fee: $35 APR: 15.40%

Credit Limit Increases: $100 increments, each require $100 deposit

Bottom Line: It will cost you $370 to maintain a $250 credit limit for the first year, with at least $250 up front, at an APR of 15.40%. You'll have $170 available credit upon receipt of your card. You'll have to put up an additional $100 every time you want to increase your credit limit.

Bad Credit Unsecured Credit Card Annual Fee: $48 Setup Fee: $29 Participation Fee: $72 (annual, billed at $6 monthly) Program Fee: $95 (one time fee) APR: 9.9%

Credit Limit Increases: $25 (per increase of $100, at their discretion)

Bottom line: It will cost you $244 for the first year, all of it billed to your credit card on your first statement, to maintain a $250 credit limit with an APR of 9.9%. You'll have $72 credit available upon receipt of your card.

In the long run, while a bad credit unsecured credit card may cost you more, you won't be tying up your money up front. Either card will help repair your credit as you make payments on time and regularly, but the unsecured card has an APR that's almost 5% lower. You're the only one who can decide which is the better option for you - but it makes sense to weigh all your options before you decide that your only way to have a credit card is with a security deposit.

About the Author

Bill A Smith is a credit counselor for http://www.americreditservices.com/ Feel free to visit our bad credit help center at http://www.americreditservices.com/bad-credit/

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