My friend is in dire need of building up some credit. His best bet is getting a low-limit, unsecured credit card and making regular charges and paying them off on time and in full. My brother did this a year or so ago and it’s worked great for him. He’s been able to get higher limits and raise his credit score.
My friend has tried a few cards and got denied. I’m not going to get into his credit history - from what he tells me he doesn’t have anything horrible on his report but was careless with his credit as a younger man and it apparently has made him a bad risk.
Have any of you with bad credit been able to get one of these low-limit (and high interest) cards? We need some recommendations for places he can apply with a good chance of getting accepted so he doesn’t keep applying willy-nilly, thus comprimising his score more.
Oh, and I guess he’s convinced that “secured” credit cards (I think that’s what they are - the ones you have to pay for?) are a bad idea and doesn’t want to try them.
Secured cards are a great way to start building credit. You give them $500 and you get a credit line of $500. I used to have one and the rates were far better than a crap high-interest, yearly fee card.
At the end of the year (or whatever their terms) the $500 can be transfered into the card to pay it off or kept in the saving account where it’s been living.
Also I have heard that people recommend not paying the ballance in full each month, but everything I see is that this does not help, it just cost you money. What they are looking for is a monthly payment pattern. It doesn’t matter if you do this by paying partial payments, or charging something every month and paying the entire ballance every month. Either way it shows a monthly payment on time.