Credit Cards For Anybody?Posted by Nick Niesen on October 29th, 2010 Credit Cards are widespread all over the US as well as worldwide and are accepted Internationally as a very convenient mean of payment either in person at stores, via the phone and the Internet or on signed forms via the fax. Does anybody can obtain this much quested plastic money? Well, to answer that we would have to understand how this credit screening and rating system work and what are the qualifications to be approved. Credit History There are three major credit bureaus that keep track of our bill-paying habits and credit history reports that are collected, stored and sold by credit bureaus. Credit reports are also called credit records, credit files, and credit histories. The Fair Credit Reporting Act states that if you dispute information on your credit file that you believe to be inaccurate or incomplete, you can ask the credit bureau to investigate the problem. If the credit bureau's investigation does not resolve the dispute, you can file a brief statement explaining the nature of the dispute. Your statement becomes a permanent part of your file and will remain on the report as long as the negative information is reported. If you have been denied credit, you can request that the credit bureau involved provide you with a free copy of your credit report, but you must request it promptly. Otherwise each of the bureaus will provide you a copy of the report for a small fee ($8 or less). You can request a copy from their web sites or 800 numbers. The good news: credit blemishes are cleared from your credit history after seven years. The bad news: seven years is a long time. The natural reaction of the average person would be something like: If I had $2,000 in cash why would I need a loan from the Bank? What these people don?t understand is that a Bank is a business, This proof is either a cash deposit or savings account or other collaterals like a house, so in case the client will default on his loan the Bank would be able to quickly transform the collateral into cash. The Problem of many people is that they never cultivated their credit history. All their life they just deposited their salary and handled their expenses. Bankcard issuers generally want to see at least a year's worth of timely payments on other accounts before issuing a card. If you do not have a credit record, you may have to start small. You may want to start by getting a gasoline card. Chevron reports payments to the credit bureau monthly, while most other oil company cards do not. Your best option for establishing a positive credit history may be a secured Visa or MasterCard. These credit cards are offered through bankcard issuers who have customers put up several hundred dollars in collateral in exchange for a card with a small credit limit. As you use the card, your bill-paying behavior is reported to a credit bureau and your credit history improves. In addition minimize your payments by choosing credit cards that have low rates and no fees. Try to limit credit card purchases to emergency situations only. Take a collateralized loan with a bank or credit union and pay it on time every month to help establish or reestablish credit. What Is FICO and how it affects you FICO is a mathematical model created by the Experian credit bureau as a tool for lenders to use in evaluating the risk associated with lending you money. FICO stands for Fair Isaac Company, the company that created the original scoring model. FICO scores consider your credit history over several years, making it difficult to increase your credit score in a short time frame. Over the long term you can improve your credit-worthiness by: Your score is calculated by a series of questions based on both your credit report & debt-to-income ratio. Each answer accumulates a certain number of points that are then added together for your final score. A typical scoring considers: ? How long you've lived at your current address Most Weighted Factors: What is Considered a Good Score? The magic FICO number is 620. If you score below 620 you are considered to have a very high default risk giving you the possibility of being declined. If you score between 620 & 650 you will be put into a "questionable" category where you will have to provide further documentation to get approved. A score of 650 or above is considered golden or "cream of the crop," and most likely you will be eligible for the best rate on your loan. Like it? Share it!More by this author |