Most credit card issuing companies cry themselves hoarse over maintaining a good credit rating. The credit cards offered to individuals with a good credit rating are usually more favorable and come equipped with better facilities. However a bad credit rating comes with a fair share of benefits. This is exemplified in the following real-life situations.
Building a bad Credit History
A certain credit card holder’s credit rating was declared bad on the pretext of her unpaid phone bills. These were accompanied with lapses in paying the credit on time. Other minor credit infractions contributed to her steadily deteriorating credit history. Eventually she was unable to borrow anymore. This pushed her into making cash payments on all transactions. On a positive note, she was freed from constantly fretting over unpaid dues.
Don’t Apply for Multiple Credit Cards
Another client purchased several credit cards on the basis of her good credit rating. These were used to finance sundry transactions including a car and a snowmobile. These purchases eventually drove her into a $1000 debt. She was forced to declare bankruptcy. To supplement her claim of being financially unstable, she stopped paying on the credit cards.
Over time, the credit card companies reduced her balance dues. To accelerate the repayment of her remaining balances she secured a home equity loan. Thus she rebuilt both her credit history and her credit balances. However this was accomplished at the cost of re-establishing stressful timely balance clearances.
How to Maintain a Good Credit Score
Though both these scenarios are essentially different, they demonstrate the benefits of a high credit rating. Unless a cardholder is willingly seeking bad credit, it is a counterproductive practice to use a credit card irresponsibly. These examples have been quoted to prove that bad credit can enforce certain credit friendly habits such as paying with cash as far as possible.
Don’t Allow Credit Card Interests to Accumulate
The credit balance, especially for cards with higher interests, should be paid off in full and on time. The cardholder should steer clear of credit cards meant for people with bad credit while struggling to improve one’s ranking. These should be resorted to only when the cardholder in a position to re-establish credit.
One of the most hazardous implications of a bad credit history is that it can severely restrict the choices of available cards. Mismanagement of funds reduces lender confidence. This impedes the accessibility of other modes of financing (like loans for cars, housing etc.).
Apply For Secured Credit Card to Raise Credit Score
Individuals with bad credit ratings are encouraged to opt for secured cards. These cards require the payment of a minimum deposit as collateral. By consistently attempting to maintain a good credit history, the cardholder can eventually hope to improve their credit rating.
The Best Secured Credit Card
The Public Savings Secured Visa Credit Card is available to individuals with poor, bad or no credit. It also offers a six month zero APR period for purchases. The Public Savings Secured Visa Credit Card has one of the lowest regular APR in this segment at 11.24%. It does not charge any annual fee and reports to all credit bureaus. This last facility is crucially important to increasing the cardholder’s credit rating