Get Unsecured Credit Card To Establish Good Credit History

2007-03-08 10:33:40

( Financial )



Banks and credit card issuers spend a lot of money for advertisements in enticing you to get unsecured credit cards. They are presented as sources of financial freedom. Hence, if managed properly, unsecured credit cards can extend additional purchasing power. Unfortunately, many have been plunged into a downward credit spiral due to lack of basic understanding and discipline in managing their unsecured line of credit.

Many financial planners would not encourage you to apply for unsecured credit cards because banks levy high interest rates on them. But if you have a blemished, or don't have a credit history, you can start building a good financial reputation through unsecured credit card.

If it is the first time that you apply for an unsecured credit card, banks will give you a lower credit limit. You will have to pay for the initial processing fee and an annual fee. Or, you can ask the bank to add these fees into your credit card upon approval; this option must only be chosen if you don't have the cash to pay for the fees. Remember that charging these fees into your unsecured credit card means that you will have to pay them back with interest.

Since you don't pledge collateral for an unsecured credit card, banks set some criteria to determine your qualifications for the issuance of a credit card. If you have undergone some credit problems in the past, make sure that you have kept a clean record for the last six months. A copy of your telephone bill and your pay stub are also some of the requirements.

If you have been paying your credit card bills diligently, banks usually increase your credit limit on the succeeding years. By paying your bills on time, you also establish a good credit history which may qualify you for other loans.


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