Credit Cards for Credit Score Improvements

It isn’t surprising to find that the recent financial crisis has caused many credit issuers to clamp down on approvals for consumers with less than perfect credit histories. Even now when the credit markets are opening up again, credit seekers with low FICO scores still find it hard to convince their banks to approve their credit. Even applicants who have good FICO scores but haven’t established their credit profile yet are also turned away.

The Gist of the Issue
Herein we can see the problem. If you aren’t given access to credit facilities it is almost impossible to build your credit profile. Without an established credit profile you won’t be given access to credit facilities. This is what people call the “vicious credit circle” and it is proving to be a very serious problem. In a recent survey it was found that over half of all the households in America suffer this problem today.

What some Companies have Done
Thankfully some companies have viewed this as a gap in the market and are more than happy to make a profit from it. The best way to grow a credit profile (strangely enough) is to use your credit cards. Many companies have set up instantly approved credit card facilities so that those suffering from the vicious credit circle problem can break-out and start developing their credit profiles. Although it is a small step, it is a vital one that consumers need to take if they want access to other loan products like car loans or home loans.

These instant approval credit cards aren’t restricted to their own house brands. Most companies that carry instant approved credit cards also have cards for major brands such as other bigger financial institutions and banks. Most will even carry cards from major retail stores so customers won’t need to worry about pulling out a card from an unknown banker. In addition to just credit cards most of these sub-prime companies will also offer many prepaid debit cards, secured credit cards and also a whole list of other financial products.

To get this going you should look in your local yellow pages to find companies that specialize in servicing the sub-prime market. You will normally find these under the financial section of the yellow pages. Give them a call and they will be able to help you out with getting a credit card. We would however like to warn you that these credit cards should not be taken lightly. They usually have high interest rates (APR) and also have terms that are extremely strict. If not handled properly, these cards can very well reduce your credit rating further.

More Options
Another simple option would be to make use of secured credit cards. Most financial institutions would have a secure credit card facility. The arrangement is quite simple. You basically put money into your credit card account and whatever balance that you have in the account will act as your credit limit. You will make payments exactly the same way that you do with a normal credit card except that this time the bank doesn’t have any risk. Just be sure to pay all your payments on time or it could worsen your credit score even further.

You can also be smart and piggy-back your credit card on someone else’s good credit. It might sound weird initially but it has proven to be very successful when done properly. What you do is get someone who has a very good history and basically convince them to let you use their cards but with you authorized as the user. Naturally the person lending you their credit score to get you the card must trust you 100%. This is why it is normally your parents or your other family members that will have to help you here.

Ultimately you will be using your credit cards to help get your credit profile so that lenders will allow you access to their financial products. There is however a very real risk that these credit cards could make your credit score even worst. It is for this reason that you must be very careful and always pay the bills on time.