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Making A Credit Card Work For You
By: Max Hunter iSnare Expert Author
Boosting Your Credit-Rating With A Well-Managed Credit Card
A considerable obstacle standing between many Americans and the consumer goods
they consider a necessary or desirable part of life is a ready way to pay for
them. From a new piece of furniture to a car or even a house an age old problem
stands in their way: MONEY – or rather how to get hold of it.
A lucky few earn enough to never have to worry about this problem. Many more
consumers have lenders simply falling over themselves with offers of credit. For
a lot of people, however, a poor credit history or a low credit rating stands as
an inexorable difference between living the life they want, and looking with
perpetual envy at their neighbor. Even relatively low cost essentials, such as a
vacuum cleaner or television set, can be too expensive if a way of spreading the
initial cost is not available.
But it doesn’t have to be that way. Credit is available for those with a lower
credit scores, but better still: Borrowing even relatively small amounts can be
a great way for borrowers with a "chequered past" to improve their credit
rating. A better credit score can lead to an array of greater awards in the
future, including better APR deals and larger credit lines. If you have a poor
credit rating and dreams of one day buying a house, a credit card is the first
logical step to pulling up your record and getting a mortgage.
Making regular monthly payments to an agreed timescale on a credit card is –
short of scooping a massive inheritance from a long lost millionaire aunt – one
of the single best ways to improve your credit score. So long as you don’t take
on more debt than you can afford, credit cars are ideal: payments are reasonably
sized and flexible, and if you budget properly can be structured towards an
ultimate payoff
Moreover, you have to be wise to how credit card companies work. Credit cards
are designed by financial institutions as a way to keep you making minimum
payments for years to come – and enslaved to large interest payments from which
they make many of their profits. Borrow only what you can, and pay back the debt
as quickly as possible.
Of course, even when dealing with the very best lenders, trying to secure credit
card financing with a lower credit rating does throw up some problems.
Financial institutions will usually insist on a higher interest rate and
sometimes may even ask for a guarantor. The interest rate can be up to three
times what a good credit borrower would be offered, although in these days of
low interest rates, that need not be prohibitively expensive.
Always try and walk before you run. If you have a high interest rate on your
credit card, borrow sparingly and pay back quickly. That way you’ll build up
your credit score and be able to get cheaper APR in the future, making larger
purchases then far cheaper over the fullness of time. If you make a large
purchase at a high interest rate and can only pay back the minimum payment each
month, with interest charges you could be paying as little as just one of half
of a percent of the existing balance each month.
Always keep you balance under control. It can be easy to let your credit card
spending run in excess of what you had planned. If you have concerns that you
might do so, ask the lender to impose an easily manageable credit limit. That
way you won’t spend a dime more than you can afford. The worst time to gain
unmanageable balance is when interest rates are at their highest. Do that and it
can seem like a lifetime before you get things back under control.
High-risk borrowers should always exercise extreme caution before entering into
any financial obligation. Before even thinking about taking on any new financial
obligation, consider your budget and ask yourself how much – if anything – you
can afford. If you decide that you can, you should still be careful about
choosing the right deal.
However, if you can get a credit card that you can manage well, the benefits are
enormous. It will enable you to spread the cost of larger purchases over
manageable periods of time; you can fill holes in your budget (that are so
common in the run up to pay day); and build up a credit history that will enable
you to get better APR on borrowings and allow you to borrow money for larger
items.
An auto loan or mortgage may seem a distant dream for many Americans with poor
credit histories, but everybody has to start off somewhere. Get a credit card,
manage it well, and you’ll soon get to where you want.
About the Author:
Max Hunter is the author of many credit related articles. If you are looking for help with Home Loans or any other type of credit issue please visit us at http://www.creditcardunlimited.com |
