More Options How To Build Credit Score

At this time, people are ever-more dependent on credit cards to pay bills and make purchases. Some recent changes in legislation and innovative new credit cards now offer more options how to build credit score and added protection for those just establishing their credit. People with no credit usually include students and new immigrants who have never taken out a loan and have no credit cards. Although their slate is technically clean, in the case of credit history none is worse than bad. It is always possible to restore bad credit with time and regular payments. However, without any credit history, financial institutions have no way to gauge your ability to repay loans or to pay bills on time. Rest assured, though, there are credit cards for people with no credit. For many people, college is the time to acquire that first credit card. Financial institutions formerly camped out in tents and booths across campus offering low-interest rates and added perks like free money or electronic devices. However, since the CARD Act of 2009, strict limitations have been enforced on marketing and issuing credit cards to young people. The law now requires any person under the age of 21 who is not an authorized user on his or her parents’ credit card accounts to provide proof of income to repay loans or to have an adult co-signer. These regulations were established to reduce predatory finance companies from targeting impressionable, cash-strapped students. So far, it seems that the law is a success because, according to a recent report from Credit.com, based on a study from the Federal Reserve, the total number of new credit card accounts opened by students decreased by 17 percent from 2009 to 2010. The easiest way to build up credit and reap the benefits of a credit card is to apply for a prepaid card. These cards do not require credit history, and they can be used just like a regular credit card for on-line purchases and bill payments. Users also benefit from incentives like cash-back offers. Best of all, you do not have to worry about late fees or exceeding your credit limit. However, before you opt for a prepaid card, be sure to confirm that your credit will in fact be reported using this card. For example, the Capital One Reloadable Prepaid MasterCard offers no credit check or activation and overdraft fees; however, it does not build credit score. Whereas the Bancorp Bank Purple Diamond Prepaid Visa RushCard charges an activation fee, but helps you to establish credit. Another option is to apply for a credit card with a guarantee from a co-signer. Having the financial backing of an outside party increases your chances of approval, and even perhaps the amount of your or better terms for your agreement. On the flip side, your handling of the account directly impacts the co-signer’s credit, in addition to your own, so if you are late or delinquent in your payments, both parties will suffer. Moreover, many credit cards now include built-in features to help card-holders establish good credit. For example, the Journey Student Rewards card from Capital One offers 1.25 percent cash back on all purchases when the bill is paid on time. Click To See More Credit Cards Info

Recent Changes In Legislation Offer More Options How To Build Credit

Credit Card Default Rate Rose For The Second Straight Month

Citibank on Thursday said that its credit card default rate rose for the second straight month, even as late payments fell. The credit card division of Citigroup Inc. said in a regulatory filing that its default, or charge-off rate, rose to 6.92 percent of balances on an annualized basis in August, from 6.64 percent for July, according to a regulatory filing. The two months of increases followed four months of decline for the default rate, but it is still far below the bank’s peak rate of 12.14 percent in August 2009. The increase means Citibank has the highest charge-off rate among the nation’s top six credit card issuers, passing Bank of America Corp., which on Thursday reported an August rate of 6.79 percent. Bank of America had held the top spot since October. Card issuers typically write off balances that are 180 days past due, the point at which they are deemed likely too far behind for customers to be able to pay back. Citibank also said that its rate of payments late by 35 days or more dropped, to 3.35 percent annualized in August, from 3.39 percent in July. That rate has returned to levels that Citibank has not seen since the Great Recession began in late 2007. Late payments, or delinquencies, are considered an important figure because they are a predictor of future defaults. Shares of Citigroup rose $1.20, or 4.4 percent, to close Thursday trading at $28.59. Click To See More Credit Card Info