How to use Credit and Credit Cards

USE OF CREDIT:
Using credit can assist you is getting and building wealth in your life when used wisely. Credit cards can give you the chance to seize opportunities when they come your way.

These days all Hotels and Car Rental companies along with many other businesses require you to have a credit card to guarantee their services. This can be difficult for someone with bad credit, no credit or youth just starting out.

Prepaid credit cards are becoming more and more popular, they give you the advantage of having a credit card without qualifying, and help your to learn the responsibility of controlling your spending as you cannot spend once the prepaid funds are used up.

Prepaid credit cards are ideal for youth or those with bad credit or those with no credit history – they are an excellent way to build a credit report and for youth to start off with credit and learn the responsibility of keeping within their limits.

Particularly good for University Students where parents give them a monthly allowance. It teaches them how to control their finances and how to use credit cards that they are likely to have in the future.

When applying for your first actual credit cards large department stores like Sears/Bay etc. are the easiest to qualify for. Visa and Mastercard are hard to get without a previous credit history, but once you have a department store card and have used it wisely for a few months then apply for a Visa or Mastercard and you are more likely to get one. Amex is more difficult and usually requires you have a history with Visa and Mastercard before they will qualify you.

Once you have credit cards, pay them off in full every month if possible to save the interest charges and to build your credit. If you cannot pay in full at least try to pay more than the minimum. The longer you keep the balance the harder it will be to pay it off with the high interest rates charged on department stores and credit cards.

Use of Credit – Get it/Keep it/ Increase it – Use it wisely
• Establish and maintain good credit
• Clean up any credit card debt – pay off each month if possible or a least pay more than the minimums as credit card interest is high and can take forever to pay off.
• Expand your good credit by expanding your limits
• Use credit more productively – use for things that grow in value, don’t use for things that depreciate like food, restaurants, clothes etc. If you do use for negative purchases ensure you pay off the monthly balances before you incur interest.
• Bankruptcy is not the end, but to be avoided at all costs – Bankruptcy means your credit record is affected for 7 years, no credit cards, no loans, no mortgages etc. Bankruptcy can certainly hold you back.
• Monitor your credit reports – and change any incorrect information – if necessary you can write a letter of a hundred words and ask the bureaus to add it to your report
• Call credit companies and see if you can negotiate a reduced interest rate

The 3 reporting systems in Canada and the US:
Equifax, Trans Union and Experian