There is a range of different types of credit available to consumers to aid meet their financial necessities. These can range from credit cards to charge cards. Here are a few common types:
- Credit cards – Credit cards allow you to pay your expenditures over an indefinite period of time, but they tend to have very high interest rates.
- Charge cards – Charge cards are like credit cards except that there is no credit limit. Additionally, you must pay your full balance at the end of every month.
- Debit cards – The amount paid is immediately withdrawn from your bank account. Debit cards can be used just about anywhere that accepts credit cards.
Banks will often reject an application for a credit card if the applicant has bad credit. There are many reasons that consumers get rejected or not approved for a credit card: The main reasons are:
- Balance to credit limit is too high
- Amount owed on account are too high
- Too many recent inquiries in past year
- Level of delinquency on accounts/Late Payments
- Too many close credit accounts
Records of these kinds are kept by private companies called credit bureaus. Credit bureaus compile factors into a "credit report" and distribute them to banks. If an individual has a problem with any of these factors, a bank may choose not to extend credit to them.
You can request a copy of your credit report from any one of the three major credit bureaus:
- Trans Union
Fixing a credit score does not happen overnight and it takes time. Any agency or advice that claims to quick fix your credit score fast is usually unreliable and would most likely hurt your score in the long run. If you have bad credit there are several things you can do to improve it:
- Check your credit report for errors – If there are any errors in your credit report, contact the credit bureaus and ask them to correct the errors.
- Inform the credit bureau of good behavior – If your credit report does not list accounts that you have paid on time send the credit bureau a copy of that account’s statements.
- Continue using your credit cards – By using your credit cards and paying on time you will show the credit bureaus that you are responsible with your finances.
- Set up payment reminders – Making on time payments toward your credit card is one of the biggest contributing factors to your credit score. Consider enrolling in automatic payments.
- Decrease the amount of debt you owe – Reducing the debt on your credit cards will increase your credit score gradually.
Dealing with your debts can often be confusing and frustrating. A credit lawyer can help you sort out your financial problems, and offer solutions, including negotiating with your creditors and possibly filing for bankruptcy. A lawyer is familiar with your state’s laws concerning consumer credit and will help to protect your interests.