But having NO credit established is almost as bad. It's not as bad as having proven yourself to not make timely payments or even default on payments, as what typically happens when you have bad credit, but no credit falls into an area where the applicant is still a high risk factor because the creditor has no idea what kind of risk you will be. The interest rate that a lender sets, as well as whether or not they will even approve a new account for someone, is heavily dependent on how they view the applicant as a credit risk.
So where does one start? For the typical college student today who is looking to get a credit card, the "catch-22" is that they do not have credit established so there is no credit history or credit score to judge them by. So they cannot get credit because they have no credit history, and they have no credit history because they cannot get a credit card. As odd as that scenario sounds, that is the situation faced by tens of thousands of college students every year.
But there are ways around this if you are willing to start smaller and get a credit history built up. Although you will clearly not qualify for an American Express card with no credit history, let's explore some of the credit options you do have to get that credit history established.
Many department stores have much more lax credit requirements and although the interest high is usually astronomical, you are not getting the card so you can charge it to the hilt, you are trying to establish a credit history. Remember the goal here and read that last sentence again!
Credit cards with gas stations are also relatively easy to get, since most do not have the highly stringent requirements for a previous credit history. Again, make sure that you charge a little bit each month and pay it off or at least the minimum payment at the end of the month, and be sure to mail the payment so that it reaches them in time to be posted before the due date.
Although many of the major credit card companies won't give you a card without a credit history, some smaller ones will. Department stores are likely candidates. Gas station cards are also easier to get.
If you are a member of a credit union or your university has a credit union you can join, they probably offer a credit card for members. This may even be a secured card, where your credit limit is defined by how much money you put on deposit with them. Even with a secured card, this is an excellent way to build a credit history.
There are multiple options for you. The key to remember is to make timely payments each and every month, and keep your running balance below about 30-35% of your credit limit. With this pattern established, you will have a very good credit history in a short period of time, and be in a position to move up to the big leagues!
Back Of A Credit Card
A credit card advance can be a great investment for a small business owner. Lenders can supply upfront business financing in exchange for your business' future credit card sales. Credit card advance lenders can generally provide money for small business owners with a short application process, fast approval, and funding can usually occur much more quickly than with a bank business loan. Overall, the experience should be relatively fast and stress-free, but there are some things that should never take place during a credit card advance deal, and if they do, you should consider finding another credit card advance lender.
Collateral
A credit card advance lender should never require a borrower to put up collateral to secure the credit card advance. Lenders do not need collateral because the credit card advance payments are automatically deducted from your business' credit card sales. With a credit card advance, the business is viewed as separate from the borrower's personal finance history. Consequently, a credit card advance should also never affect your personal credit score.
Closing Costs
With some business transactions, certain closing costs are required. These closing costs can sometimes be in addition to the costs that have been previously discussed. During the merchant cash advance process, there should be no surprise costs. Before you agree to your credit card advance, most lenders will thoroughly explain everything involved in the process, from beginning to end. This includes the amount of money that you will be advanced, and your complete payback amount.
Taking a Large Percentage in Monthly Credit Card Sales
When a lender approves a credit card advance, your monthly credit card sales are taken into account. Therefore, a lender should never lend an amount that requires them to take more than 10 percent of your business' gross sales for repayment of the loan. This is inconvenient for the borrower, whose business must be able to survive on the amount of money that is left over.
Requiring Fixed Monthly Payments
One of the benefits of receiving a credit card advance is the needlessness of making fixed monthly payments. Your customers' purchases pay for your credit card advance repayments, leaving you to worry about other aspects of your business instead of stressing to remember to make monthly payments. A credit card advance lender should never require you to make monthly payments in addition to the amount of money that is being deducted from your credit card sales.
Both Jon Arnold & David Castro are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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