Visa MasterCard Discovery

Bad credit and ways to deal with it

[Tuesday, November 9th, 2010]

It is not abnormal to be flooded with jingles and reports about credit scores on the television these days. According to a recent report from FICO, which creates the commonly used credit ratings of customers, 43.4 million credit card holders, have credit scores less than 599, which mean that 25.5% of the credit card customers have established a bad credit. However, it is not impossible to reverse these figures. It is possible for card holders to improve on their credit scores by diluting the negative credit history that they have built over time, through a positive pattern.

The best way to do it, irrespective of whether credit card customers would like it or not is to obtain a credit card and use it with a fair sense of financial responsibility. It is interesting to note that even if you don`t make any purchases on the credit card it is fine, because the fact that there is no outstanding balance associated with your card offers positive information for the credit report.

Bad credit is not a good position to be in. It takes time and calculated expenditure and the provisions and reforms instituted by the card law will make the process far easier for credit card customers.

There are two options for those people with bad credit, the secured card and the unsecured credit cards. Although this fact still remains true, the fee associated with these cards has changed a lot.

Unsecured credit cards are best for those customers who are looking to restore their credit standing and also access additional credit in the future, in the form of loans.

Card companies offered an introductory credit limit of 250 dollars on unsecured credit cards but have also charged a fee as high as 200 dollars even before the customer touches the credit card. This means that credit card customers have only 50 dollars to spend after they receive the credit card. However the CARD Act, limits credit card companies from charging more than 25% of the credit limit in terms of fees during the first year. In reaction to these changes credit cards now charge a processing fee ranging between 25 to 45 dollars additionally, apart from the 75 dollars annual fee which together combines to make up to 125 dollars a year. This means that the unsecured cards will have more utility because the amount of credit available on the credit cards.

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