All About Credit Cards

Many believe that having bad/poor/weak credit is the exact same issue as not having any credit. That’s not quite right - they are actually different from one another.

Having “no credit” refers to situations when you’ve never owned a car, rented an apartment or had a credit card. At this point, lenders (card companies) have absolutely no idea whether or not you’d be a good candidate for paying back the bills you generate. In these situations, getting mom or dad to co-sign your student credit card (provided they have good credit) will allow you to get started with plastic.

If you are one of those with “bad” or “not so good” credit, you’ve already had your shot at a credit card or apartment rental and didn’t do such a great job. Certainly, unforeseen circumstances could have taken place (family emergency, financial difficulties, etc.) but your credit score doesn’t care about those issues - a low credit score is a low credit score.

Some suggestions for those with weaker credit:

* Specific credit cards for low credit - Many car companies offer cards for those with weaker credit. These may have additional upfront costs (annual fee, application fee), but by paying them off, you’ll improve your credit score and eventually upgrade to a card for those with stronger credit.
* Secured credit card - This type of card allows customers to provide an initial outlay of cash as the funding source for their card. By providing a fail-safe amount of money, it’ll be much easier to pay it off each month.
* Department store/gas cards - Whether it’s Mobil or Macy’s, most retailers have leaner restrictions on who they provide credit for. Therefore, it’s almost like a second chance at establishing credit. Just make sure to pay back what you use, as these types of cards generally have much higher APRs!

So, make sure you understand the difference between lacking credit and not having good credit. Both can be fixed, as long as you take the appropriate steps to do so.