Pre Paid Credit Cards and Bad Credit

Factual Questions
1

What’s the deal with these pre-paid credit cards? I remember seeing some commercials for some drug store selling them I thought. Now I can’t find it. I love the idea, the convienence of a credit card, but the utility of cash. I want one.

Which brings me to my next point. Over 7 years ago I had some . . .errrr. . . credit trouble. It has now been more than 7 years and I believe that means the statute of limitations is up and I should be able to get my credit cleared. What is the best way to go about this? Where should I start?

I spent an hour looking through google hits and I tell ya there is almost as many credit card sites as there are porn sites - they seem to be run by the same web disgners with all those damn pop-ups.

Thanks in advance.

DaLovin’ Dj

2

I’m not an expert at all, but from personal experience (also in my past) here’s what you need to do:

  1. Check your credit reports! There are three major ones (sorry can’t remember their names). You can get a free copy from each once/year, or a free one if anyone denies you credit. I know American Express has a service that you can use (www.americanexpress/trackstar). I have used them and they’re decent, but for some strange reason their credit score is slightly more lenient than other guys. So if they give you a score of about 700, you can expect other credit reporting companies to rate you at the mid 600’s. Just my observation.

  2. Prepaid credit cards are just that. You give them a deposit – usually a few hundred bucks – and you can spend up to that amount. Some will actually double your limit, so give them $500 and you can spend up to $1,000.

  3. best way to fix your credit? Make timely payments. Late payments kill your credit, fast!

  4. Negative items on your credit report go away automatically after 7 years. Checking your report should tell you when each negative item is scheduled to be removed. Not sure if bankruptcy lasts longer or not though. I THINK positive items stay on for 10 yrs.

Good luck.

3

The best way to start building your credit back is to get someone to issue you some credit and keep the payments current religiously.

I understand that the easiest places to get credit from and who actually reports regularly to credit agencies are department stores like Pennys or Sears. Start small, get a Pennys card and charge some socks or towels or something you can use.

Another good way to build credit if you have a checking account, is to get an overdraft protection, which is nothing more than an unsecured loan.

I live near a small town, where you have credit everywhere. I’m always amazed when a clerk asks cash or credit? I have to think a bit and ask, “when did I open an account here”? “Dunno, you’ve always had credit with us”. Most of those folks though don’t report to credit agencies. Stay with the national chains for that.

I believe it is easier to get credit if you have bad credit than if you have never had credit at all.

4

You are not entitled to a free report once a year. You are entitled to a free report if you are denied credit and you request the report within 60 days of the denial. You are also entitled to a free report annually if you certify that you are unemployed but seeking employment, receiving welfare benefits or believe yourself to be the victim of fraud. If none of the above apply, you may obtain a copy of your report at a cost of no more than $8.

Usually referred to as “secured” credit cards. A good way to build a positive credit reference if you keep up the payments.

Bankrupties stay on your file for ten years, as do civil judgments. The only exception is Chapter 13 bankruptcies. Many (most? all?) credit bureaus have adopted a voluntary policy of deleting successfully completed Ch 13 bankruptcies after seven years.

For more information check out www.acb-credit.com for the Associated Credit Bureaus.

5

If you’re talking about the pre-paid Mastercard sold by Rite Aid, it’s not a credit card at all- it’s more like a gift card. I don’t know if they’re still selling the Master Card version, but there’s also one called Visa Buxx, so you could check their website.
Doreen

6

Not so fast there cowboy. If you live in Colorado, Georgia, Maryland, Massachusetts, New Jersey, or Vermont then you are entitled to a free copy every year from each bureau (Two in Georgia).

7

Fair enough; I was talking federal law rather than state by state. As always, YMMV.

8

A similar option is a debit card. I have a Visa card that ties into my checking account: Payment with it works the same way as writing a check, from the bank’s point of view, and the same as using a credit card, from the user’s or merchant’s point of view. My “credit limit” is the size of my checking account, which I can increase or decrease as I like. Ask your bank if they offer something like this.

9

I had bad credit, paid off some cards for less than the full amount and am still unemployed. I just received a Mastercard from Capitol One with the Kmart logo. You may want to try to get that card. I have a 500 limit but thats enough to take care of emergencies

10

Resident credit expert here…manager from TransUnion.

Chronos and Bare give good advice.

In steps, here is what you should do to remove the fuzziness from all this:

Get at least one credit report from one of the three national repositories, or ‘national credit reporting agencies’. Visiting the websites will explain alot, and you can order from there or choose to dial the 800 number, or choose to write. Explore your options. Different agencies release free reports by phone, or web, etc.

www.transunion.com
www.equifax.com
www.experian.com
Okay. Look it over and notify the agency to correct any information, or to update anything that has been sitting idle. Derog can only stay seven years. Bankruptcy (the court record) can stay for 10. Usually, most lenders can’t verify stuff over two or three-years old, so if your negative info is getting old, just dispute it.

Most scoring models don’t look at derog as it gets older, so worry about how your past 3 years looks. Heck, pay for a report with a score if it isn’t free.

Scores drive just about everything now. Apply for a Visa, and a computer pulls the report, gets it scored and you get different levels of credit and rates based on the score. You could be anywhere from “denied” based on these “reasons”, or you could be offered a gold card, no fee with some free protection or offers or bonus paybacks…or anything in between.

Generally, good clean modest amounts of credit keep a score high.

Gas cards, some department store cards and secured credit cards are a way to build credit.

If you have no credit, you’ll have to start somewhere, somehow. For many, it’s a student loan, then a card they are offered in college.

But, doing business with a bank and getting debit cards might help, and overdraft accounts too.

If I found myself creditless and an adult, I would try to keep a reg bank and get a card through them. Keep a checking account with them and ask them if they can get you a secured card. You put 500-1grand in an account and they give you a card w/ a $500 limit.

11

If you go for a secured card (I get those offers in the mail all the time too) just be very, very careful to read the fine print. I check them out just for the yuck factor sometimes, and some of the offers are incredible…fees that add up to over $100 (which are automatically charged to your account), 21-day–or NO–grace period for interest-free payments, etc.
As someone with absolutely NO credit, I can sympathize. It’s very hard sometimes…if I need something, I literally have to have the cash in hand before I can get it.
On the positive side, within a year or so my husband and I will be debt-free except for a house payment, and I don’t have to worry about anyone stealing my identity and ruining my credit! :smiley:

The debit card is the way to go, for me at least…you can use it like a Visa for online or store purchases, and you don’t pay interest or have to worry about sending in those pesky bills.

Regards,
karol

12

When I referred to secured credit cards, I was referring to getting one with a bank you are already doing business with, as I mentioned. I too would be wary of taking an internet or other cold mail offer from some fly-by-night bank. Establish a relationship with a popular bank and maintain accounts there. Go for a secured card after establishing the relationship and understanding their biz practices.

~Phil

13

OK, so if scoring models don’t look past the last three years:

  1. Why keep the information for longer than three years?
  2. Am I wasting my time trying to clean up a couple of accounts from 6 years ago, since they’ll drop off my report next year and clearing them won’t have a positive impact on my credit score anyway?
14

And 3) Opal, how’s your credit?
4) I just tried again to get my report from one of the big three and they “can’t verify” me. That’s two out of the three that have been unable to verify me, so why does anyone pay attention to what they have to say when they can’t even keep track of the people they supposedly have comprehensive files on?

15

Because we have 150 million active files and about 10,000 like you.

Give me your name, address and ssn and I’ll verify your ass.

Give me previous addresses if you moved in the last two years.

99.9% of the people who don’t have a file or can’t be located omit key identifying information, then follow-up with a broad based remark like yours.
As for scoring models and the 2-3 year limit…I said “most”.

Older derog might affect insurance, or employment, or high end loans…most apps don’t involve those things.

16

I didn’t say it was TransUnion that couldn’t verify me…