Credit card options that will allow consumers to begin the process of establishing a credit score by building a credit history oftentimes will mirror options for bad credit borrowers, but for consumers who may have little or no credit history due to simply using very little credit, there could be more options available when these individuals are looking to begin the process of establishing a more positive financial position in their personal life. While bad credit borrowers do often have difficulty when it comes to finding affordable lines of credit or they may see increases in their interest rates on open lines of credit, the bad credit repair process can be difficult, so it is in a young consumer’s best interest to start their financial life on the right foot.
However, consumers who may simply have little to no credit history are typically in a position where, if proper financial practices are implemented, they can benefit from credit card use and may be able to see what positive effects a good credit score will have in other areas of their life. As an example, someone who may have not established a good credit history might have trouble with certain forms of financing, like a home loan or car loan, as there are lenders who want to not only look at an individual’s current financial position but their responsibility and repayment habits when it comes to debts like credit cards or loans.
Many individuals who are young and, in some cases may still be in college or just out of high school, do have opportunities to acquire lines of credit, despite recent laws from the CARD Act that will usually require a cosigner for anyone under 21. However, some young consumers who may be able to show sufficient proof of their income and ability to cover credit card obligations may find a line of credit that can be useful when it comes to establishing their score, yet there are also secured credit card offers that can be beneficial for these card-seekers as well.
When it comes to looking for the right credit card to begin establishing a credit score and history, consumers will obviously want to first look at interest rates of various cards and the terms for using each particular card they research. While Bankrate.com states that the current average rate on fixed credit cards is around 13.36% and variable interest credit cards are averaging around 14.43%, there are also numerous financial institutions that are making more credit card opportunities available to a wide range of consumers as there are indications that credit card offers may increase in 2011 from the previous years.
Yet, consumers who are attempting to establish their credit history need to make sure that they not only get an affordable credit card, but if a low rate is advertised only for an introductory period consumers must look at what rate will be offered after this timeframe has ended. Also, consumers must simply spend within their financial means to repay and avoid only meeting minimum monthly payments if at all possible. While proper use of a credit card can be affordable for some, even when only minimum payments are met, interest rates will cause the overall amount the cardholder pays to increase and if an emergency arises which may require a consumer to use their card, it could make matters worse if the cardholder is already carrying a balance.
However, anyone from a student to a simple consumer looking for a way to begin establishing their credit history in the hopes of building a credit score so that other areas of their financial life may benefit needs to make sure that they not only explore different credit card offers and aspects of these cards, but implement proper habits so that they can avoid excessive debt, interest charges, or fees that may be associated with a card, as this could create a setback when a consumer is attempting to establish their credit history.