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Creditors now Targeting Less-than-Perfect Credit Card Customers

Choosing Credit Card

Does your poor credit score disqualify you from credit card offers? Maybe not.

Most consumers, over the past couple years have become quite accustomed to only receiving credit card offers when their credit is stellar. However, the tide is beginning to turn when it comes to credit and to whom the creditors will extend credit.

Recent statistics indicate that credit card companies, on average, are now sending out twice as many credit card offers since last year. What makes this surge in credit card offers so significant, however, is that consumers with even poor credit card now being included in the creditors’ mailing lists.

Bad Credit Doesn’t Have to Mean no Credit

Creditors, unlike a few years ago, however, are actually putting a bit more thought into those individuals with bad credit. In other words, some types of bad credit card better than others.

Take for instance, the concept of “strategic defaulters.” Creditors deem these types of consumers better than those who are credit “abusers” or “sloppy payers.” Didn’t think creditors separated some bad credit from others, did you?

Strategic Defaulters as a Result of the Recession

Strategic defaulters, as described in a recent article in the NY Times, are individuals whose credit scores took a free fall because they walked away from a home because the mortgage was larger than the home’s value. Creditors look at these consumers as good bets because they may have paid all their bills on time up to this point. And they are also likely consumers who make a good living. Remember: income still matters in terms of risks for the lender.

Strategic defaulters are different from sloppy payers or abusers, who often neglect to pay bills or only pay some bills on time. Another category considered by creditors is the “distressed borrower,” an individual who does not have the means to pay his or her bills on time.

Yet another category considered by creditors is the “first-time defaulter,” a consumer who always paid bills on time before the recession took hold. Many creditors deem these types of consumers worthy of a second chance.

So, the next time you get a credit card offer, consider it an opportunity to make a second chance and begin redeeming your credit score.

Does your poor credit score disqualify you from credit card offers? Maybe not.

Most consumers, over the past couple years have become quite accustomed to only receiving credit card offers when their credit is stellar. However, the tide is beginning to turn when it comes to credit and to whom the creditors will extend credit.

Recent statistics indicate that credit card companies, on average, are now sending out twice as many credit card offers since last year. What makes this surge in credit card offers so significant, however, is that consumers with even poor credit card now being included in the creditors’ mailing lists.

Bad Credit Doesn’t Have to Mean no Credit

Creditors, unlike a few years ago, however, are actually putting a bit more thought into those individuals with bad credit. In other words, some types of bad credit card better than others.

Take for instance, the concept of “strategic defaulters.” Creditors deem these types of consumers better than those who are credit “abusers” or “sloppy payers.” Didn’t think creditors separated some bad credit from others, did you?

Strategic Defaulters as a Result of the Recession

Strategic defaulters, as described in a recent article in the NY Times, are individuals whose credit scores took a free fall because they walked away from a home because the mortgage was larger than the home’s value. Creditors look at these consumers as good bets because they may have paid all their bills on time up to this point. And they are also likely consumers who make a good living. Remember: income still matters in terms of risks for the lender.

Strategic defaulters are different from sloppy payers or abusers, who often neglect to pay bills or only pay some bills on time. Another category considered by creditors is the “distressed borrower,” an individual who does not have the means to pay his or her bills on time.

Yet another category considered by creditors is the “first-time defaulter,” a consumer who always paid bills on time before the recession took hold. Many creditors deem these types of consumers worthy of a second chance.

So, the next time you get a credit card offer, consider it an opportunity to make a second chance and begin redeeming your credit score.

Important Questions to ask when Applying for a Secured Credit Card

Choosing Credit Card

If you have bad credit or no credit, it may be in your best interest to apply for a secured credit card. In fact, a secured credit card may be your only option for improving your credit. Because credit cards can play a huge role in our lifestyles, it only makes sense to have a credit card on which you can rely.

Secured credit cards, however, are not fully understood and have not garnered a lot of attention in terms of their advantages. There are a number of circumstances that apply only to secured credit cards, so it is important to understand them before applying for a secured credit card.

The following set of questions will help you decide if your next secured credit card is best for you:

• Are secured credit cards tracked on my credit report? Absolutely! Because of this, secured credit cards are a great way to begin building (or rebuilding) your credit. Many secured credit cards will provide monthly reports to the major credit reporting agencies, thereby helping you repair your damaged credit in a shorter amount of time. However, some credit card companies report only yearly. Before applying for a secured credit card, ask the creditor how often they report to the credit reporting agencies.
• How much money will I need to deposit? Because secured credit cards work like a debit card, you can only spend what you have deposited. Therefore, if you want a credit limit of $500, you will need to deposit $500. This money, however, will not be used to pay your credit card; unless, of course, you fail to pay it yourself. Instead, it will be kept in an interest-bearing account.
• How much of a return can I expect on my deposit? Most secured credit card companies offer about the same return as you would get on a savings account. However, there are some creditors that will offer greater returns. It is up to you to find them!
• Will my spending limit ever increase? If you have established a history of making timely payments, chances are the credit card company will reward you with an increase in your spending limit. Your responsible credit card behavior will allow you begin spending above your deposit amount.

Credit Cards for Bad Credit: A Good Idea?

Credit Card Types

It’s an alluring idea. You have struggled with turn downs due to no credit or bad credit and now you have the opportunity to have your very own credit card. Granted, credit cards for those with bad credit often carry a higher interest rate and low credit limit, but they do give you the chance to build or rebuild your credit. For this with no credit, it is an excellent idea. For those with damaged credit, you need to ask yourself if it’s really the right route to take, considering your already dented credit score.

On the Path to Rebuilding Credit

If your credit is already terrible, but you are absolutely serious about getting things under control, there are some steps you need to take. Start working out payment plans and paying down your debts. Work with a credit counselor or debt consolidator if you need to. Check your credit report to ensure that your progress is being accurately reflected and that no inaccurate information is appearing. Continue to pay your current bills that are not in default or arrears on time and in full every time they are due. This will go a long way in improving your credit report and might lift your score upward several points.

Once you have all this debt behind you, it is time to think about rebuilding your credit. If you want to be deemed credit worthy in the future, you need to get that score up and keep it up. There are several options to look into for rebuilding credit, however, you have to decide which ones are the right fit for you. You could buy a car from a place that offers financing, pay your payments on time and your credit score will be improved as your activity is re3ported over time. You could also go the rent-to-own route for furnishings and appliances, so long as the company reports your activity. You bank accounts are another good way to help build credit.

There are lots of other options out there, among them credit cards for those with bad credit. Should you do it?

The Credit Card Option

It is not a bad idea, per se, to open a credit card account and get your hands on a high interest card with a low credit limit in order to help rebuild your credit score. It can work and work well, if undertaken in a responsible manner. You will need to use the card wisely, ensuring that you not only pay the bill and pay it on time, but that you pay it in full, as this can make a bigger difference in your credit rating and your finances than a minimum payment.

Now, if you are suffering the low income or no income blues, this might not be the option for you at this time. When you’re back on top of your game, you might reconsider it. If you problem is poor spending habits or financial irresponsibility, you might want to get help to get this under control before you obtain a new credit card to rebuild your credit. If your credit has already gone down the drain, there is no use getting a new card that you can not or will not pay for. A card intended to rebuild your credit can not do it’s job if you don;t do yours. You’ll simply be left with more debt and an even lower credit score.

Avoiding Credit Repair Scams

Credit Repair

A good credit history is an important and valuable element to maintain. Bad credit can impact your life, preventing you from obtaining loans, housing and these days, even a job. You want to fix that bad credit, and though it is possible to do it yourself, some people would prefer to have a professional leading the way. Call it peace of mind or having a hand to hold, it often helps to have someone who knows the industry and knows how to explain things to you, offer advice and make things happen.

Ideally, a credit repair agent only has your best interest in mind. Unfortunately, that is not always the case. In a world where it is all to common for profits to take precedence over ethics, there are many credit repair scams appearing on the scene. These companies offer promises in pretty little packages. Unfortunately, they can’t and don’t deliver.

That’s not to say that all credit repair offers are not legit. In fact, there are many out there who are reputable and don’t make empty promises. However, the scammers are the ones who want a fortune up front and leave you hanging in the end. Face it, if you had the kind of money that they want up front, wouldn’t you just start paying the debts on your own?

An informed consumer is a smart consumer. Here are a few tips to help you avoid the pitfalls of credit repair scams.

Promise #1: Erasing Information From Your Credit Report.

No wonder so many people fall for this one. The image of some guy standing over your credit report with a big pink eraser, just scrubbing away the mistakes, does have its appeal. Unfortunately, this is one of those promises that they not only can’t keep. Information on your credit report can not simply be erased. Inaccurate information can be disputed and removed if and when found to be inaccurate, however, accurate information will remain on your credit report for 7 years and as long as 10 years, if you file bankruptcy. Accurate information can not be removed just to make your credit report look better.

Promise #2: Pay Us Large Sums of Money Up Front & We’ll Work Our Credit Magic

Nope. Not even close. Not only will this not happen, should you fall for it, it’s illegal. These companies can not ask you to pay before they deliver on their promises. They must provide you with a contract, inform you of your rights in writing and offer you a minimum of three days to change your mind and back out.

Promise #3: We Can Create a Second Credit File for You.

The idea behind this is that you can have another file to use for credit purposes, obscuring the information in the original file, allowing you to obtain credit more easily. First of all, this is what they call fraud. You can not legally obtain credit by obscuring or omitting the truth. Companies promising to create another file or “file segregation” are offering you an empty promise. It’s not only wrong;it really does not work.

Remember, you can dispute and correct mistakes on your credit report yourself by contacting the three reporting bureaus. You may also add an explanation and can easily work to improve your score on your own. However, the help of a professional is often a good idea, so look for a credit repair company that does not sound to good to be true and follows the guidelines as set above. A consumer credit counselor might also be a great choice to help you get your credit back on track.

The Progress Card by Capital One: Helping Consumers Rebuild their Credit

Credit Card Debt

Although there are many credit card companies that are trying to distance themselves from those consumers with bad credit, there is one card that is specifically designed for credit card customers that have a less-then-stellar credit rating.

Capital One recently introduced the Progress Card, which will be available around Christmas. This card features no interest rate and incentives for paying on time.

Like any other card designed for individuals with bad credit, the interest rate is quite shocking. In fact, it may start as high as 34.9 percent. However, most individuals have few options when it comes to rebuilding their credit or being approved for a credit card.

Incentives to do Better

It is important to note that, although the Progress Card has a super-high interest rate, credit card customers can work toward lowering their interest rate, simply by paying their bills on time and paying more than the minimum payment.

For example, if you pay your bills on time for six months, and pay at least the minimum payment during that time, you will be eligible to have the interest rate reduced by five percent. As you continue to pay your minimum payment, on time, you can expect to see a five percent increase every six months. Pay on time for 18 months and that 34.9 percent interest rate is now down to 19.9 percent.

Capital One may also offer consumers an increase in their credit limit by their fourth statement if they display responsible card usage.

Working Towards a Better Credit Rating

The Progress Card, true to its name, enables individuals with bad credit to make progress and work toward a better credit rating. This card provides consumers with the tool necessary to begin building a positive credit history and credit rating.

For many individuals that have been adversely affected by the economy, the credit card crisis and the near-collapse of the housing market, this card could have not come at a better time.

Perhaps more credit card companies can take a lesson from Capital One and discover that many otherwise-responsible consumers need a second chance at rebuilding their credit and rebuilding their lives.