Money Advice Guide

There are thousands of Americans out there who may not be aware that there is such a thing as a prepaid credit card. If you are one of these people, don’t worry. Yes, there is such a thing and if you read on, you’ll quickly learn of its advantages of a prepaid credit card.

It’s important to possess a credit card - even if you don’t plan on using it. Why - because it establishes a credit rating and everyone single person has a rating. A credit rating is designed to let banks know what your financial situation is like, and your ability to repay debt. Nowadays, more and more people are shopping online. Have you ever tried purchasing something without a credit card? This scenario is probably unlikely. If you want to purchase something big, like a car or a home, it is next to nearly impossible to do it without some form of credit. For those of you who have had credit problems in the past, there is hope. That hope comes in the form of prepaid cards, which allow you to open an account (like a bank account) and load the card as you wish. The process is similar to using debit cards, except with this form of credit card, you are helping your credit rating to improve rather than to deteriorate more.

If you have no credit, chances are, it’s because you are young and starting out in today’s society. It is also possible that you have less than perfect credit, forcing you to start re-establishing your credit history, once again. Since it is important to establish a good credit history, owning a credit card is a good start, but only under certain conditions. Regardless of what anyone might say, if you have bad credit, you’ll need to take immediate steps of action to erase the debt that’s causing your credit to go from poor to bad. It goes without saying - building good credit is so important today, especially for young adults wanting to buy a house or a car one day. Most young adults don’t have the cash upfront to afford a home. That is where having good credit comes in handy. If you have good credit, a bank will be more likely to approve you for a mortgage on a house or a lease on a car. If you have bad credit, you may be stuck in no man’s land.

You can’t erase bad credit, but there are things you can do to change it for the better. As previously mentioned, getting a credit card to help with bad credit is a wise move. Every month, your credit card company will send credit reports to credit bureaus, which are designed to help you re-build credit. It is important to note that once you receive a credit card, the responsibility is on you. You’ll need to make sure that you’re paying off your monthly balances in full. It may also be helpful to get a secured credit card - that way, you’ll have to maintain a certain amount of money in your account at all times. It’s also good to obtain a copy of your credit report to track positive (and negative) changes being made.

There are many advantages to using a credit card, such as these. First of all, they work like regular credit cards. This means you can use them worldwide. You’ll also get superior customer service and protection as you use your card. Prepaid cards are also easy to get. You can pick them up anywhere - whether it’s online or at the local retail store. There are also no interest charges. That’s because you’re not borrowing anyone’s money. You’re using your own. This also means that you won’t go into debt by using your prepaid card. It’s simple to use and effective in today’s world where it’s easy to spend too much when you may not have the cash to pay for it later on. Be smart and consider a prepaid card.

©Copyright 2005. Caitlin Crosain is a successful writer and publisher of resource websites on how to Repair Bad Credit and qualify for Secured Credit Cards and Personal Loans

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Did you know that your credit score can vary depending on who pulls your score and why? Imagine this…. You need a new car and are thinking of buying a home too. You do your homework and pull your score online directly from the credit bureaus. Your score online is 650. The car dealer tells you your score is 619 and your mortgage officer says your score is 694. Why the different scores? What causes such discrepancies?

Lets look at 3 items that can make your score vary.

1. Which credit bureau was the credit pulled from?

There are 3 major credit bureaus: Equifax, Experian, and Transunion. Each bureau collects information as reported by your creditors. However, your creditors may not report to all 3 bureaus. This means that you may have different information in each bureau. Different information can make for different scoring outcomes.

2. There are differences in scoring models.

A scoring model is the formula used to create your score. Fair Isaac is the company that creates the models for the 3 bureaus. While there are 3 different bureaus, each bureau can have different models of scoring. Think in terms of computer programs… one program may go through updates and changes (version 3.0 and then 4.5.) Both versions work, but have different options based on the version. The same principal works here. The bureaus may be using different versions of scoring models depending on who pulls the credit.

3. What was the reason for the credit inquiry?

One more factor may be the reason your score was pulled. You see, buying a home should require different parameters that getting a credit card or buying a car. Each one of these will weigh different factors of your credit file more heavily. For example, a credit card company will want to factor revolving credit more heavily that a car loan. This way they will have a better indicator of how you will handle the new revolving credit card they are considering giving you. So the reason for your credit inquiry (mortgage, loan, credit card, ect.) will impact what makes your score up. Note: Federal law now requires that all 3 bureaus make a free copy of your credit report available to everyone. Since there are no others reasons for the inquiry the score will be generic based on all your credit, not a score potential creditors will use in their decisions.

Does this all seem confusing? Well unfortunately it is. Federal law now requires that when a credit inquiry is performed, you have the right to know the score and the indicators that helped make up that score. With the new laws enacted Congress is trying to make things better. Still, the best way to overcome these discrepancies is to build a solid credit file!

Ed Nailor is a loan officer with Alexander Associates in Charlotte, NC as well as webmaster and website designer. His latest websites include BestNewCreditCards.com and PlasticPlatinum.com, both offering information on all types of credit cards. For those seeking to rebuild credit, check out http://www.BestNewCreditCards.com/poor-credit-cards.htm for the best credit cards for bad credit. For more information on financing options for North Carolina properties, visit his website at http://www.droprent.com.

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