Credit SparkFinancial Tips for the Average Joe

Unsecured credit cards are the most common type of cards. Unsecured simply means that they do not require collateral to back up the amount borrowed. Because there is no collateral involved, applicants must have a decent credit rating in order to qualify. Unsecured cards typically have large interest rates and in many cases annual fees, but for some people it is well worth the extra cost since they do not have to risk any of their assets if they can’t make the payment.

To get an unsecured card you will need to open up a savings account or a checking account. If this is your first credit card you should make sure that the bank account is reputable and the interest and fees are not outlandish. If you don’t have a bank account your request will most likely be denied by the credit card company because they require information about your financial history.

Steady employment is another requirement in addition to an active bank account. Almost all credit card companies will require some form of employment and an adequate amount of income. Usually the company will also check your credit history to assess whether or not you have the capabilities to pay off the debts. They may also contact your employer to verify your employment, especially if you don’t have any credit history. In other cases they may just ask for you to list all your employment information, this will usually include the name of your employer, address of the company, and how much you make annually. Processing the application usually takes about two weeks and the company will notify you if you have been either rejected or accepted, if accepted your card will arrive in the mail. Online applications are much faster and you may receive immediate response and your card will arrive shortly thereafter.

When payments are made on time and the account is maintained the available credit will grow. This is a good thing for your credit score as it will increase your debt to available credit ratio. As with any financial endeavor, use caution and restraint because after a year or two of keeping the account in good standing your available credit will reach many thousands of dollars and temptation may rear its head. If this happens simply look at your interest rate and calculate how much you pay per thousand borrowed. More than likely this exercise will bring you back to reality. Hang on to that debt to available credit ratio so when it comes time to get a mortgage or business loan, you will be glad you did.

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