If you’re in the market to get a  secured credt card , you may be wondering if you can find a card that has a low interest rate. While most of the rates on secured cards are generally high, there are some options when it comes to finding a low rate. Here’s a few tips you can use in order to find a lower rate.

Look for higher fees - I know you won’t want to pay higher fees when it comes to annual fees, monthly fees, etc but generally, when the fees are higher, you’re going to pay less interest. This is a way for the credit card companies to recoup the costs.

Look for intro rates - I know intro rates don’t’ last for long but if you can find one that’s good enough, you may be able to use the card and then request a different type of card. Sometimes this works and sometimes it doesn’t. It never hurts to try! The worst thing that can happen is that you will need to cancel the card.

Research online - There are a lot of cards out there. It’s your job to research all of the cards and find the lowest rate if that’s what you’re worried about. Since rates change on a daily basis, I can’t tell you exactly which card has the best rate.

As long as you do your research and you follow some of the tips above, you’ll be able to find a card that hopefully suits your needs. Honestly though, in the long run, worry about paying your card off in full so that you can avoid the interest rates.

Top Debt Reduction Tips

As far as debt reduction tips go, this is an important one: move your existing high-interest credit cards to a lower interest rate card, or get a secured loan with a lower rate. Do a little research to find a credit card with a low interest on balance transfers. If your credit is good, you can usually find a zero percent interest rate on balance transfers, at least for a certain period of time. 

Credit Cards Offers

An option for those with bad credit is a secured credit card. This type of card requires you to open a savings account. The account serves as security for the line of credit. The credit available to you is a percentage of your deposit. 

How to Get a Credit Card With No Credit History

If you use a credit union, ask about secured credit products before checking out other sources. Otherwise, search Bankrate’s list of secured credit issuers (go for one with low fees) and make sure the issuer you choose reports to the credit bureaus.

Author: Tom Tessin

Start finding low interest secured credit card applications all at FINDsecuredcards.com, where you can find more of Tom’s work.

Article Source: http://EzineArticles.com/?expert=Tom_Tessin

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Want to apply for a secured credit card?  Click here .

Today with the economy being in such a bad state and credit getting even tighter the best way to obtain a credit card is applying for a  secured credit card . Most lenders are more than happy to approve you for this type of card. The reason of course is the fact that you have to make a deposit in their lending institution for the amount of credit you are seeking to obtain. The credit lender is now able to have money in an account that they can use for other purposes when necessary and you have a credit card that you can use for the purposes that you need.

The only problem is that you need to make sure that you are not going to be paying out more for the use of the credit card than it is worth to you. The interest charges, late fee attachments, yearly member fees can mount up to the amount of credit that you are allowed to use. Remember you cannot touch the money that you have on deposit that is what makes your credit card secured and the lenders use that to take out your fees so if you use most of it for those fees then you do not have much left to spend.

When you are making reservations for the things you want like airlines, hotels, etc. you need to keep enough in your account so that you can get the reservations without difficulty. When it comes time to apply for a card, don’t settle for the first one you see. Instead, do your homework and apply for one that suits your needs.

Apply for a Secured Credit Card To Build A Credit Rating 

Credit cards are no longer a luxury. In fact, in a list of ‘five things you cannot live without’, you may very well find credit cards on the number three spot.  

Secured Credit Cards With Rewards

When you get a secured credit card you are still entitled to the rewards offered by other credit cards that are available.  Airlines will give you a secured credit card and offer you frequent flyer miles.

Bad Credit and Unsecured Credit Cards

Since an unsecured credit card isn’t very likely if you are having issues with your credit the best plan of action is to look into a secured credit card for the time being. 

Secured Credit Cards

There is an alternative way that can help you establish a credit rating and at the same time, get a credit card. This is called secured credit cards. This particular credit card is great for people who are looking for a way to establish credit.

Author: Tom Tessin

Browse the best secured credit card applications and find out more tips like this all at FINDsecuredcards.

Article Source: http://EzineArticles.com/?expert=Tom_Tessin

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When credit card offers start arriving in your childs mail, they can become an easy remedy for being broke and this will lead to even more money mismanagement and even credit problems or worse, bankruptcy! Teaching your children about money doesn’t have to be a hard lesson though and if you get to them while they are young, it will be easy and fun for them and you will be setting up good habits to carry them through for life.

There are a number of ways to begin teaching money management so they don’t have troubles in the future.

Introduce them to money itself! Help them with homework math problems and get them used to the idea of counting money, quarters, pennies, dimes, dollars and so on. Have then do simple math like adding and subtracting and so on. As they get older you can add more complicated math problems and issues such as understanding how to calculate interest from credit cards, the first type of credit they are likely to get.

Teach by being an example! This can be harder on us than our children, but it is worth it. Your children will learn about money management easier when you learn the lessons you are teaching! You children won’t believe a word you say if you don’t have good money management skills yourself, so learn all YOU can about credit, budgeting, investing, saving and avoiding or reducing frivolous debts.

Give them an allowance! Yes, that means your going to have to give them some money yourself, even if it is only a dollar or two a week. let them make their own decisions about what to do with it. Some say a dollar for every year of age is realistic in our current times. If you have a 10 year old, give them 10 dollars per week or month depending on your own budget. If they are never given any money, they will never learn how to manage it! Hopefully they will have learned from you by the knowledge they have received how to spend it or even if they want or need to. Whether they blow it on the first want or decide to save it, they will be better money managers when they become adults.

Teach them one thing at a time! Don’t overwhelm them with all types of responsible money management at once or you will lost them in the process. Children are not often great managers of much at a young age and if you let them fall once in a while, this can be the best lesson of all! The more experience they have with money, the better skilled they will become in managing it. If they so choose to blow it as soon as they get it, then this will teach them about patience and saving for what they really want and avoid impulse buying. You are also setting up the foundation for investing at this time, but this can be brought into the picture later when they are older.

Teach them about credit and credit cards! Human beings are impatient creatures and we want things now even if we don’t have the money for them! Credit cards have become the staple of modern families which often goes into impulse as well as necessity buying leading to out of control credit card debt as well as other types of debt. Using credit wisely can open the door to better financing options when buying a home or car and this depends greatly on your credit score! Teaching your children that credit is a loan not a gift and that it has to be paid back, often with high interest rates, and that only when they develop a plan to pay it back, should they get a credit card.

Have family discussions about money! Talk to them about their money management. Encourage them to come to you with any concerns they have about money and setting up a time to discuss money keeps everyone on track. If they are younger, talk about checks and credit cards and when they are teenagers, talk about the effects on the economy, what inflation and deflation means or how to economise at home and finding other alternatives to spending money such as borrowing an item or renting it for a one time use purpose or even making this yourself!

Show them the importance of saving and don’t bail them out! Bailing out your children when they are in financial trouble can be the worst mistake of all. If they were saving and suddenly blew their savings and don’t have the money later for something important will teach a valuable lesson. It’s going to be a costly lesson, but learning that every decision has it’s consequences will never be forgotten and the next time they may choose differently! Teenagers will need money for car payments and insurance plus maintenance so they need to budget their money for those things. If they run out of money, it will hurt when they are on foot before they are paid again and you will how fast they figure this out! If they have to walk, ride their bike or take the bus to work, most likely they will be more careful with their money next time.

We all are aware of how money can be fun and if you teach your children while at a young age about how to handle money, you will set them up for ways to insure their financial future and help them make it the best it can be. Contact your bank and other financial institutions for educational information you can use to teach your children the responsibilities of money, including these articles and my websites!

Government publications can be useful too. Encourage them to open a bank account that best fits their age group and other account options that help them spend and save wisely. When they are ready, teach them the importance of having a credit card and a saving account so they will have resources for emergencies. It will not always be easy and the best lessons you can teach are the ones we often need ourselves, but raising children who understand money and using it wisely sets them up to achieve their share of the American Dream and these lessons can never be taken away!

The Skinny On Credit Cards

How to get rid of credit card debt; How to teach your kids about credit card debt; How to avoid late fees and identify credit card company tricks; How to take advantage of 0% credit card balances transfers; How to improve your credit.

American Kids Switched On To Saving

The new poll results also indicated that kids are more cautious and measured when it comes to using credit cards. Only seven percent of people aged 29 or younger said they would use a credit card to purchase an item that they couldn’t afford.

New Bill Gives Kids No Credit

The answer may lie in how we teach our kids about finances and credit scores … Perhaps there should be a class in high school on the subject required for graduation that teaches kids about credit cards, FICO scores and investing.

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Having a history of bad credit can reflect very poorly on your chances of getting a mortgage or a refinancing loan. If you have bad credit, it is important that you take the proper steps to mitigate the debt. Your credit rating will improve as you pay off your pending debts and you can work towards becoming financially secure.

Here are some of the many ways in which you can go about fixing a bad credit.

Don’t let the scammers mislead you
In the first place, do not under any circumstances fall for the tall claims made by the sundry companies hawking their Credit Repair Services through aggressive advertisements by way of fliers, newspapers, T.V., Radio, and Internet. There is no legitimate way they can ‘erase’ your credit problems ‘100%’ or remove bad credit reports from your credit file. And if you go along with their offer of giving you a new credit identity, you could find yourself arrested and charged for fraud. Misrepresenting your personal details and falsifying your financial and work details for the purpose of securing a loan application is a federal offense, a crime you can go to jail for. So, understand this, there is no magic wand that anyone can wave to cure your financial woes. You have to salvage the situation yourself by a good deal of patience, common sense, self-discipline, and determination.

Get a copy of your credit report
The credit report can be obtained from the central bureau of the three main consumer reporting companies in the USA - Equifax, Experian, and Trans Union. You can contact them separately or at the same time through their common website - http://annualcreditreport.com. On your application, they will send you a free credit report from here. Remember that you can directly contact the credit report bureau. There is absolutely no need to go through a credit service company that will charge you a good amount in fees for something you can access for free. You should apply for your credit report every year actually, whether you have bad credit or whether your financial situation is sound. It is possible that certain glaring errors may have crept into the report and, if you neglect to get these errors correct, they may spoil your credit rating. Another thing to watch out for is Identity Theft. There are enough stories around about scammers appropriating legitimate identities for fraudulent purposes. It is better to keep an eye on your credit report and avoid such problems.

Clear your debts
Start paying off all your outstanding debts. Try to clear up your debts as soon as you can. First repay all the debts that have the higher interest rates and then work your way through the others.

Don’t lag behind on current bills
Be prompt and regular about paying off your current bills. Late payments will not reflect well on your credit report.

Reduce the credit cards
Cut down the number of credit cards you have or close down the accounts altogether. Don’t apply for a new credit card until you have paid off all your debts.

Do not file for bankruptcy
And do try to keep away from tax liens and collection accounts as well. If you file for Bankruptcy, tax liens, and collections, it will figure prominently and not to your advantage on your credit report for ten, seven, and seven years respectively. Which means that for the next ten years you will have little or next to no chance of getting your new loan applications approved.

Polish up your act
If you lead a lavish life-style, well, do consider sobering up a bit - at least until your debts are cleared out of the way. Cut down on all unnecessary expenditure and sell some of your assets if it becomes absolutely crucial.

And after you have cleared up your bad credit, you may return to square one and start all over again.

Can You Repair Your Credit After Bankruptcy

A bankruptcy will remain on your report for 7 to 10 years but the difference is that rather than struggling to repair bad credit you can start all over and begin to rebuild your credit. 

Real Ways To Rebuild Bad Credit

Rebuild Bad Credit Credit Cards Ideally Banks should give ample notice with It is removing the late fees under by the BOA article found a manager by there would be no late fee of It is reviewing excellent payment history? 

By Sonal Panse Published: 3/3/2007

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8 Tips for College Students Wanting to Apply for a Credit Card

Here’s what you can do to make the credit card application process as hassle-free as possible.

Tip #1 Prepare proof of identification. Have your photos ready as well as all your valid IDs. Credit card companies will always have to verify that you are indeed who you say you are before you can proceed any further. IDs where your age is stated are also preferred because you have to prove you’re at least 18 years old as well. If you have any bills under your name, take them with you as well because they can serve as proof of residence.

Tip #2 Prepare proof of schooling. Credit card companies generally prefer to issue credit cards to students who belong to accredited colleges and universities. If you belong to such a school then you’re in luck. If not, you can compensate it by showing your previous records - if they’re excellent, that is. Just like when you’re applying for a driver’s license, credit card issuers also take academic and extra-curricular excellence as a sign of maturity and trustworthiness in your part.

Tip #3 Prepare proof of financial assets. Student credit cards tend to charge higher rates than usual, but you might be qualified for lower rates if you’re already working or you have money and a bank account in your name. Either way, make sure you can submit documentary proof of your work or assets.

Tip #4 Speaking of interest rates, the first thing you should look for in a credit card is the lowest possible interest rates. This might mean not being able to enjoy a reward-based credit card, but at your age, you might not yet afford the higher rates charged by credit cards offering reward points. If you see a 0% APR credit card, make sure to check how long the offer would last and what the standard APR is afterwards.

Tip #5 A number of credit cards allows you to apply even without a cosigner, but some of them tend to have stricter application requirements. If you don’t want to go through the trouble of submitting additional requirements, simply ask your parent or legal guardian to act as your guarantor when you apply for a credit card.

Tip #6 Always look for a credit card that allows you to manage your account online. This will allow you to check your account balance regularly and know when and how much you have to pay for your credit card every month.

Tip #7 There are a few additional perks that you might deem necessary. If you are fond of shopping online, look for a credit card that offers you fraud liability guarantee at no extra cost. Other credit cards offer you ‘thank you’ points for being a prompt payer.

Tip #8 Now that you know what you need from a credit card, find one that matches your preferences and then submit your application. Remember to be courteous and answer all their questions honestly. You’re sure to have your application approved in no time. Have fun with responsible swiping!

Does It Matter Where I Apply For A Credit Card?

When searching for a new credit card you have a couple options to take. You could apply with a small bank or a major credit card company. 

You Have No Need For A Credit Fix If…

Do not apply for more credit cards if you already have outstanding card payments to begin with. Every card application will reflect on your ability and responsibility to manage or handle debts. 

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The introduction and subsequent popularity of debit cards is proof that consumers are making the choice to move away from choosing the credit option when making their purchases. Particularly in these tough economic times more and more people are looking for ways to cut costs and tighten the budget. It may not be widely known but there is another product on the market that can help to keep an even tighter lid on spending - pre-paid cards.

Most of us are familiar with "gift cards" which operate in a similar way. There is a set amount of available credit on the card and you cannot access any more than what is preloaded in value. These types of cards are known as a "closed loop" card as you can usually only use the card in nominated stores. They are also "disposable" as once the credit balance has been used up the card is thrown away.

The new type of pre-paid card, that has actually been in use in Australia for a number of years now and is gaining in momentum, is an "open loop" pre-paid card. These cards are able to be continuously "topped up" when the credit runs out and are able to be used at a range of retail and service stores, much like a credit or debit card.

These cards are perfect for a large section of the population for various reasons. For example, if you are not able to qualify for a credit card or do not have a bank account you can still use a pre-paid card as it is not linked to any line of credit application or deposited funds and can be topped up over the phone or on the internet. For this reason there are also added security benefits for consumers, particularly travellers, as there is no personal information stored on the card. So if it is lost or stolen there is little risk of fraud. Additionally, if lost or stolen most reloadable cards can be cancelled similar to a credit or debit card.

One thing to be aware of though is to check the fine print in relation to associated fees and costs. Some vendors may charge application and/or transaction fees and other service fees such as balance enquiries. It is also important to confirm that the card is actually reloadable when you purchase it.

The cards are quite flexible in their application and can be used according to various consumer requirements. For example, it can be used to provide a weekly allowance to children. This teaches them to operate on a set budget and will ensure that they do not get out of control with their spending. It can work well for travellers, allowing them to only have access to the funds that they have loaded on to the account, or mum and dad can deposit a set amount every week to help with the travel expenses.

Individuals could also use the cards to help them stick to specific budgets for various areas of spending. They could have one card for clothes and shopping and one for holidays. By having a set regime where you only top up each card with a set amount every month you are forced to stick to your nominated budget.

Whilst not all retailers currently accept the pre-paid cards it is hoped that over time awareness and acceptance of the cards will grow and see them a regular part of our purchasing culture.

Credit Cards - Current by Discover - Teen Prepaid Debit Card

The Current by Discover - Debit Card for Teens is a prepaid debit card developed especially for teens, but with their parents in mind. This card helps parents and teens work together to set spending limits and establish responsible spending habits. 

BuyRight Prepaid MasterCard - Review

The BuyRight Credit Card is a prepaid debit card. This means first you must deposit money before you can use your card to make purchases.  

Prepaid Cards: Pros and Cons

When you buy a prepaid card — you have to load it with your money and then you can use it like you would use a debit card. Most prepaid cards will charge you a fee when you are loading it initially and then other fee like — annual fee.

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It is hard to find a place that will give you a credit card if you have bad credit. This article will go over how you can get a bad credit card. There are many people in this country with bad credit, but now there are many companies out there to help them.

Before you even get started you will want to check your credit report. The best place to go to is Annualcreditreport.com. They will give you a free report. The best thing to do is try to get a low interest rate card. You also want to make sure it is a low fee before you go the secured way. A lot of people will find out when they check their credit it is not as bad as they thought. This will tell you what kind of credit card you need.

People with bad credit have to re-establish their credit. The way to do that is with a secured credit card. Here are a few ideas that will help you.

1. When determining what kind of credit limit you can get depends on the amount of deposit you make to secure the card. There are a lot of companies that want you to stay low at first to see how you do with that amount.

2. This secured card is used on Mastercard or Visa and it will work where ever they accept these cards. The best thing is you can get cash out of the ATM machine all over the world, which will help if you are in sales, or on vacation.

There are two places that you can go to get these secured cards and they are First Premier and Orchard Bank. They have a lot of offers there to help with the kind of card you will need.
With each place it is different. With the First Premier they offer the Gold Visa and Mastercard. They have a low interest rate that will allow you to pay in full or keep a balance. This is if you have problems paying the whole amount.

When you go to Orchard Bank they offer the Platinum Mastercard, which does have a low interest rate on what you buy. They report to the major credit bureaus so that can rebuild your credit quickly.

Depending on the type of card you have the Orchard Bank has a high annual fee. From first Premier your annual fee could be $29 to $95, they will let you know.

When starting out on getting your credit better you will have a high rate. But as you use the bad credit card your credit will get better. You can ask for a lower fee or look at a different company to get a different kind of card.

A prepaid debit card is a good way to go also. It is like having a checking account; you would make deposits to activate the card. By adding additional funds you can reload your own limit.
Again using this kind of card you are able to get cash anywhere in the world. A prepaid Visa or Mastercard is able to be used anywhere that they accept Visa or Mastercard.

People with bad credit do have a chance to get back on track. You just have to take some time and redo your credit and let them know you want to fix this. Your bad credit card will help with this.

 

Find Top Credit Cards for Bad Credit

When shopping for credit cards for bad credit, you have plenty of options to choose from. 

Tips On Getting A Good Prepaid Credit Card
Such cards are valuable when you need to restore your bad credit and they are easily procurable and will do you a great deal of good when attempting to fix your poor credit history. 

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Most parents believe that allowing their kids to have credit cards at a young age teaches them a lesson about managing their finances or money. The one thing that the parents should be aware of in terms of giving their children credit cards is to ensure that these kids are given guidance as well as support for them to be responsible in handling their credit. Having student credit card also helps in building the kids’ credit histories that are truly important in the future.

There are some financial institutions that have second thoughts when it comes to issuing student credit cards, and if they ever issue one, they only give a very low credit limit and when the student fails to pay on time or goes over the credit limit, these institutions charge a lot higher interest rates since they know how risky it is to issue credit cards to students knowing of their instability. Therefore, a student should learn that having a card is a big responsibility. In the event that the said teen has proven his or her maturity, then a good credit score is up for grabs at the credit bureau, giving them an established credit history after they finish school.

If a student wants to apply for a student credit card, what is the first step? The first step is to have credit since it is a fact that in order to get credit, you need credit. Here are easy ways to establish credit and be able to apply for a student credit cards: One step requires the student to open a checking account or savings account. Once the creditors see this information, they will, more often than not issue a credit card because they have seen that the student has an account that could be used to pay the purchases.

If a teen still is unable to get a student credit card from a credit card institution, another way of jump starting credit is to apply for a retail store card. It’s definitely easy to acquire a store credit card, and by using it in a wise and responsible way, one can start building up credit positively. In just a few months, the student can reapply for a student credit card in a major credit card company and would most probably be approved as soon as the creditors see how responsible the student has been with the retail store credit card.

Knowing that there are a lot of institutions offering student credit cards today, the student should select a card with the best offer and below are the basic features and benefits that should be present in the card applied for: there should be no annual fee, no co-signer requirements, no minimum income, zero percent introductory fee with a low APR after the introductory phase, and of course, a free rewards program.

There may be dangers present when a student is given a credit card but we should not forget the benefits there are. Student credit cards are tools for establishing credit, and careful and responsible usage helps build the student’s credit score. Student credit cards also offer a lot of great rewards that can benefit the users a lot.

 

Best Credit Card Deals: The Smart Way to Choose the Best Credit …

It may be easier to just search all the available credit cards in the market, but it’s best to look for something that is geared specifically towards college students. 

Our world of Credit Cards!

Even young adults are being lured into the world of credit cards. Student credit cards are widely available. Some link the parent to the card.

College Students And Credit | Student Credit Card

It is very exciting to know there are companies out there willing to provide a college student credit card to you. This is great but you only need one. 

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A student credit card is useful in many ways. There are several such cards in the market and these have diverse features. Using such cards, the student fees of the universities can be paid.

A student credit card enables one to pay for expenses online like a degree, online courses, language-learning materials or music. Procuring such a card is facilitated by many companies. Using this a student can create a good credit history which can be utilized for larger purchases like a car or a home. However, students should beware of the fact that the interest rates are high and they may fail to pay the penalties on time. Also, the students may accrue a debt they cannot repay. A good option is to have a debit card that has a credit limit. The expenses are subtracted from the existing funds and when the credit limit is reached, purchases have to cease. The student must consider the pros and cons of the credit cards before finalizing on any one.

Role of parents in student credit card

There is a need of parents assistance for co-signing before getting a student credit card. The parents must be aware that their children are using it properly. They can guide them regarding comparing and selecting the right card. Some credit cards have low limits and this makes the students spend the money carefully. Some of these have no annual fee, 0% APR or a rewards program. Sometimes the reward may offer something for free, like a gasoline card for free gas.

Tips regarding some prominent student credit cards

There are several student credit cards available and these are associated with different tips and precautions. The facts mentioned below are garnered in November 2007. The Citi Dividend Platinum Select Card for College Students provides a 5% cash return on eligible purchases at gas stations, drugstores, supermarkets and convenience stores. This includes cable for 6 months and 2% further. Additionally, there is 1% cash return on all purchases whenever the MasterCard credit card is used. On all individual balance transfer transactions of minimum $1500, $5 cash is received back. On all cash advances taken at the standard cash advance rate , 1% cash is received back. This card has the following advantages:

• No minimum income required
• No co-signer needed
• Credit education tools
• The lost wallet service
• Citi Photocard option
• Citi Identity Theft solutions

The Citi mtvU Platinum Select Visa Card is issued by Citibank specifically for college students. This has a unique reward program that awards points to students for two reasons. For wise use of credit and attaining high grades. For general purchases, one point and five points for expenses at bookstores, record stores, restaurants, video rentals and movie theaters. If payments are done in time and do not exceed the credit limit, 25 points are added. From 250 to 2000 points are given and these depend on the student’s GPA. The maximum number of points that can be earned are 75,000 and these remain for maximum five years. An annual fee is not charged. However, the interest rate is more than average.

The Capital One Platinum Card for students has a purchase APR of 0% upto February 2008 and this will vary after this month. The credit limit is $300-$3000. There is 24-hour roadside assistance along with towing, lock-out service and flat repair. Also there exists collision, damage and loss insurance on rental cars. There is emergency card replacement or cash advance in case the card is lost or stolen. Online account service is available along with 24/7 customer support.

Paying for University

There are several universities that facilitate payment by using the student credit card. The Student Fee payment form has to be filled. This includes the student’s name, name on credit card, phone number, area code, student number, amount to be paid, whether Visa or Mastercard, credit card number, expiry date and the signature. Then, this completed form has to be faxed. Another method is to phone the credit card payment.

College Student Credit Card Debt

There’s no point in ending your college days with a ton of credit card debt. 

Is It OK to Bridge the Gap With Credit Cards?

A credit card can be used to help you make ends meet, but you’ve got to cut everything down to bare bones, first. It’s not for "blowout vacations, a closetful of expensive clothes, and going out four times a week.

By Abhay Burande Published: 11/13/2007

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Although the vast majority of adult Americans (and many minors, as well) have some kind of credit to their name or have accrued debt, remarkably few have a strong understanding of how this affects them in their daily lives.

Credit ratings are earned through the accrual of debt and how these debts are paid, be they paid on time, paid late, or if payments go into default. Typically, a person gathers debt in one of three ways: credit cards, automobiles, or homes. Most people build their credit rating (or ruin it) by using a credit card (or cards) that are easily attainable by someone without a credit history. When the individual pays their balance in a timely fashion, a positive rating begins to build. Conversely, when debts are left unpaid one’s rating plummets.

Most ratings range between 500 and 800 points, with 800 being excellent and 500 being poor. The better a person’s credit rating, the lower their interest rate will be. For example, a young person just beginning to build their credit history will tend to have high interest rates between 12 and 22% APR (Annual Percentage Rate — the actual amount the borrower pays in interest annually). After establishing themselves as a reliable borrower (via on-time payments), the individual will usually find themselves paying rates in the single digits.

When it comes time to make a major purchase, such as a vehicle or house, it is especially important to have achieved a high credit score. Large purchases are usually done with a long-term loan and/or a sizeable down payment. When a buyer has a good credit rating they usually get a low APR as well as being required to put forth a smaller down payment. When a buyer attempts to make a large purchase with poor credit, they not only must put more money down, but will usually pay a much higher interest rate and may even have to pay this higher rate over the course of a longer term loan. For example, whereas a buyer with excellent credit may put down a 2% down payment ($2,000) on a $100,000 house and get a 30 year loan at 6%, a person with poor credit may be subject to putting $5,000 to $10,000 to get a similar interest rate (and may still need to extend the loan by an additional 5 to 10 years). Each additional year amounts to several hundred extra dollars paid in interest alone.

By these simple figures, it’s easy to understand that a good credit rating saves the buyer money in both the short AND long term, therefore paying back debts in a timely manner is the best investment.

By: Connie Barker -

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Connie Barker is the owner of several financial websites including those which deal with Credit Ratings

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