Get Loans

Credit is a double-edged sword. It allows you the freedom to purchase items that are otherwise unavailable to the cash-only consumer, such as hotels, travel, online transactions, and rental cars. The sharp edge of this sword is obviously your obligation to repay the debt. Used carelessly, overwhelming credit card debt can ruin your FICO score, and put an incredible strain on your goals to achieve financial independence. Remember, responsible people don’t create debt with the intention of never paying for it. Use credit wisely, and remember that shoppers with credit cards handy spend an average of 34% more while in stores than those who do not charge their purchases.

Credit card horror stories are everywhere, and there is a good chance you know somebody who has experienced something similar to this:

A young college student received a credit card offer in the mail. As a full-time student, he did not have a steady income and wondered how he managed to qualify. His credit rating was based entirely upon his potential to earn income as a future college graduate, and the complete lack of negative information in his file.

The student carried his freshly minted card in his pocket for several weeks, resolved to never use it, except for an emergency. Near the end of the semester he and a few classmates were pulling an all-night group study session in preparation for final exams. Around midnight somebody suggested they call out for pizza. They pooled around twelve dollars in cash between them and nearly gave up in frustration when our hapless credit worthy student volunteered his credit card. It was a small beginning, as these things typically are, but credit use is like an addictive drug. It is so easy to use, and the pain of repayment is always somewhere down the road—too far away to be associated with the enjoyment of pizza tonight.

By the end of the school year, the student had accumulated over $1,000 in debt on his card. While his monthly payments remained small, they represented a significant strain on his budget. His monthly allowance from home was now being spent to make credit card payments, which meant he had to use the card to make more routine purchases. The balance grew out of control, leading to a destroyed credit rating.

Another example of credit card use involved a young lady who worked a low paying job. She had dreams of a better life and spent a lot of her time looking for real estate investment opportunities. She carried four credit cards, with an available cumulative balance of around $12,000.

One day after work she came across a small house for sale by owner. It needed some work, but following an analysis of the market, she knew this home was worth more than the asking price. Using the cash option on her cards, she obtained $10,000 to make the down payment and cover closing costs. The owner carried the financing at a fair interest rate.

After closing she immediately set to work cleaning up the property. She then had it professionally appraised and listed for sale. For three months she managed to make the minimum payments due on her cards before the house eventually sold for a modest profit. At closing the buyer assumed the loan due to the original owner, leaving a little less than $20,000 profit. She immediately paid off her balance due on all of her credit cards, and parked around $8,000 in her bank account.

Both of these stories illustrate the power and dangers of credit card use. While it is not advisable to get involved in investments using credit cards, it is an option when quick cash is needed to capitalize on opportunity.

If you are resolved to obtain a credit card, but have difficulty getting approval due to your FICO scores or payment history, you may want to try one of the following steps.

1. Apply for a credit cards from a retail store, such as Sears. The best way to approach a retailer is with a proposed purchase. Walk into the retail store of your choice. Pick out an item you need. At check out you will be asked for payment of course, at which time you announce your desire to pay with their credit card. Chances are your approval may be granted by the store manager within minutes. Some gas stations still offer credit cards you can use exclusively at their stores. Again, the standards for apporval here are generally lower than the Visa, MasterCard, and American Express options. If your applicatin is approved, be careful not to over extend yourself. Use your credit privileges wisely and make each payment on time. Within a few months you will probably be receiving major credit card offers in the mail.

2. Talk to your bank or credit union representative. Even with lousy credit, sometimes small banking institutions that already have your business may be willing to extend you credit. This is especially true if youhave a history of maintaining a positive balance in your account, and have not bounced checks through them. If your banker refuses you credit, ask them about secured cards. This is not the best option for credit cards, and in fact creates some limitations on usage. However, if everything else has failed, you may need to establish a pattern on reliable payments to qualify for a regular card. Secured cards are backed by money you have placed in a savings account at the bank.

3. Another option, which in my opinion should be your last resort, is to find a co-signer. In most cases this will be a family member. Your balance due on credit card debt becomes a responsibility of the co-signer, making it vitally important that you make the payments on time. In your eagerness to accept the terms for a new credit card, take time to review the specific terms of your agreement. Before replying to an offer, or submitting an application you need to know the following at a minimum about who you are doing business with: What is the current interest rate charged? How long will this rate stay in effect? What is the rate after the conclusion of my introductory period? What upfront fees are due and payable before I can use the card? What are the annual service fees? What are the rates for cash advances?

I understand you may not be in the position to be particular, but there are some things you should not tolerate. I will not tolerate annual service account fees, outrageous interest rates, and up front fees to activate my account. In fact, I want the company offering me a credit card to pay me. That is, I want a super low interest rate for a set period of time which will allow me to transfer balances from higher interest rate cards.

You should be especially wary of changing interest rates. Frequently, credit card companies offer low rates for a given period of time (usually 3-6 months) in order to entice you in to getting their card. If you haven’t read the fine print on your terms of agreement, you wil be surprised by how much the new rate can vary from the introductory rate. Be wary of this and don’t allow yourself to build a huge balance, just in time to enjoy a 25-60% APR. If this happens to you, find a new card quick, and transfer the balance to a card with a lower APR.

Phillip Collinsworth is the author of several books available on Amazon. He hosts a website offering free information on wealth building, and finding income opportunities through Internet marketing. Visit:

http://www.wealthsearch.org