Best Green Travel Credit Card Hacks – Several companies have launched credit cards that focus on giving back to the environment.
But until recently, I hadn’t found a card that focused on the green traveler’s needs as both an environmentalist and a traveler.
Is there such a thing as a best green travel credit card?
Best green travel credit card Hacks
I was invited to beta test the ZYNC Card from American Express, and I’ve been exploring its benefits for a few months.
Overall, I like what I’ve found.
The ZYNC Card has “packs” — essentially interest areas — that are aimed at twenty- and thirty-somethings and benefits that will appeal to eco-conscious travelers.
Give Back: Get Paid to Volunteer
You don’t quite get paid to volunteer with the Give Back Pack, but you can get up to hundreds of dollars worth of gift certificates (or hundreds of other rewards) each year just for volunteering.
And the ZYNC Card rewards you for donating to nonprofits.
The Give Back Pack is free to use.
Give Back Pack
Earn points for each logged hour of volunteer service
Earn points on your charitable donations, more using your American Express card.
Shop Green, Ask Green, Go Green
With the Eco Pack, you earn extra points when you shop at certain green merchants and you get access to an eco-concierge.
I know who I’ll be calling in my search for an environmentally friendly mattress.
Like the Give Back Pack, the Eco Pack is free to use.
Earn twice the points when buying from 4,000+ green merchants — as rated by Greenopia
Points redemption discounts on certain eco-friendly merchandise enabling you to redeem 25% less points for qualified eco-friendly products and carbon offsets.
The Travel Pack costs an extra each year, but you get additional discounts on rental cars (be sure to book a hybrid) and double membership rewards points on various travel purchases.
Green Travel Card Hacks and Benefits
2X points on airfare ticket purchases
Discounts at Avis, Budget and Hertz
Enrollment in Credit Card Registry, which allows you to easily cancel and replace all of your credit cards should they be lost or stolen.
And the ZYNC Card gives you other American Express benefits that will save you money and stress while traveling.
Emergency assistance when you are 100+ miles from home
Free car rental loss and damage insurance
24/7 roadside assistance
Baggage insurance plan
And because ZYNC is a charge card (not a credit card), you pay it off in full each month.
This means that you can set a better budget for your travel, and you won’t rack up hefty interest fees.
Downsides of ZYNC Card
For me, the big downside of the ZYNC Card (and other AmEx cards) is that many locally-owned and small businesses don’t take American Express.
While that can be a bit of a hassle, I’ve just made sure to have a backup credit card with me at all times.
You also have to make sure the benefits you get from the card justify the expenses of the annual fee and the packs you choose.
But AmEx really does have great benefits that I didn’t know about before.
So I would recommend reading up on those to be sure you take full advantage of them.
There are lots of reasons to use a credit card while traveling.
Overall, I think the ZYNC Card is a great option for green travelers.
How to Prepare and Protect Your Identity Theft Protection
Identity theft is more prevalent than ever. Learn what identity theft protection is and take measures to protect yours.
Identity theft continues to be a major concern as statistics show the incidents are on the rise.
Identity theft protection is essential.
Unfortunately, there are still many people who don’t realize the risks and dangers, which makes them even more vulnerable.
Yet, there are ways to protect yourself.
The best way to start is to learn what identity theft is, the dangers and what you need to do in case it happens.
What is Identity Theft?
Identity theft is a criminal act wherein an impostor steals your personal information.
This could include your Social Security number, credit card numbers or driver’s license.
The purpose is to impersonate you.
The information they steal is used to avail of services, credit and merchandise under your name, or it could be used to give the thief false credentials.
Aside from causing you to run up debt, identity theft also causes false identification.
This could lead to legal trouble; you could end up with a criminal record or have arrest warrants issued because your identification was used for committing a crime.
Types of identity theft
True name identity theft
The perpetrator uses your personal information to create new credit card accounts, open a checking account, get a bank check or set up a new cell phone service.
Account takeover identity theft
The thief uses your personal information to access your current accounts.
What usually happens is the thief changes the mailing address on your account and produces a huge bill before you realize there’s a problem with your account.
The Internet has made identity theft easier because transactions are done minus any personal interactions.
How criminals get your information
Thieves use various methods to obtain personal information.
They may hack into a database. Some will sort through discarded mail and paperwork left unattended.
Another way is called “shoulder surfing.”
This is when the thief stands next to someone at the Bureau of Vehicles or other public office and take note of the information the person ahead provides as he/she fills out a form.
Ways people steal identification
Go through trash to find personal information
Obtain personal information from redundant office or IT equipment like hard drives, USB memory sticks, mobile phones, PDAs, servers and desktop computers that have been discarded in dumping sites.
If such equipment are not properly disposed of or sold without deleting private information, they may be obtained by an identity thief.
Use information in official registers to find public records about people
Mail theft, pick-pocketing and housebreaking are also used to steal credit cards, ATMs, passports, identification cards, etc.
Identity thieves sometimes pose as representatives of banks or government offices and ask questions like:
- “What was your first pet’s name?”
- “What was your first car model?”
- “What’s your mother’s maiden name?”
Skim data from credit cards and bank accounts using card readers, producing clone cards in the process
Use contact-less credit card readers to obtain information in RFID passports.
Watch people input their login username and password, ATM numbers, calling and credit card numbers in public areas
Steal personal information off computers using Trojan Horses, malware or keystroke logging programs.
Such techniques are often used to hack into databases, systems and networks to steal personal information, usually in voluminous quantities.
There are other ways that ID thieves obtain data.
This includes taking advantage of breaches that result in the mistaken publication of persona data such as Social Security numbers, credit card numbers, addresses, names etc.
Be careful what info you share on a resume
In addition, some ID thieves work together and publish bogus job applications online.
Their purpose is to collect resumes and personal information.
Also, you need to be careful about the information you provide in your resume.
Aside from your name, resumes usually need to include email addresses, location, contact numbers and more.
To avoid ID fraud, apply only in legitimate companies and do not provide banking or financial information in your application form.
Reports also show that ID thieves are taking advantage of insider info and exploiting the access of IT users to snatch data.
There are a growing number of cases of hackers infiltrating IT companies to steal valuable personal data as it is being processed.
ID thieves also impersonate trusted and reputable companies via phone calls, SMS text and emails in an attempt to persuade you to divulge personal data or login credentials.
What they usually do is create a fake website.
If that doesn’t work, ID thieves might go after weak passwords.
Once they gain access to your account, your personal details will be at risk.
Social networking sites
ID thieves obtain data by going to social networking websites and searching for personal information that users post.
The information they obtain
Categories of identity theft
The Identity Theft Resource Center has divided identity theft into the following categories:
Criminal identity theft: Someone poses as you
Financial identity theft: Someone uses your name to purchase goods, services and credit
Identity cloning: Someone uses your personal information to assume your identity in daily living
Medical identity theft: Someone uses your name and personal information to obtain drugs and medications
Child identity theft is becoming more common as well
There are many reasons for identity theft aside from money.
Several cases have been linked to funding and facilitating criminal activities such as espionage, phishing, terrorism and illegal immigration, among others.
There are also a growing number of identity cloning which have been used to go after payment systems, medical insurance and online credit card processing.
You need to monitor your email and check for any irregularities.
Some ID thieves try to divert emails and posts to gain access to personal information.
You should monitor your credit card statements, bank accounts, and bills regularly.
What to Do if My Identity is Stolen
If you discover that you’re a victim of identity theft, do the following immediately:
Call the national / local fraud department and inform them your identity has been stolen
Ask the relevant institution to freeze your account. If you’re the victim of credit card theft, call your bank immediately.
Tell them what happened and ask to have your account frozen.
Change your pin number, login or password if they’ve been stolen, and notify your network administrator immediately.
The next step is to place a fraud alert and work on getting a credit report.
Contact your bank and file a report to the FTC.
Go to the FTC official website and fill up the online complaint form, making sure that you provide as many details as possible.
If you haven’t done so already, file a complaint with the local police and bring the following:
A copy of the FTC Identity Theft affidavit
A government photo ID
Proof of address (utility bill, rental statement, mortgage statement etc.)
Any other evidence you may have of the theft (IRS notices, bills, complaint letter you sent to the bank, etc.)
After you file an identity theft report
Once you have filed an identity theft report, get in touch with the fraud department for all the businesses where the theft occurred.
Before you call each one, remember the following:
Explain what happened and provide as much information as possible
Request the business to freeze or close your account
You should also ask the establishment to furnish you with a letter stating that the fraudulent account is not yours.
It should state you are not liable for what happened. Be sure the illegal transactions are removed from your account.
Keep the letter the establishment sent you in case the fraudulent transactions appear on your credit card report later.
The next step is to have the bogus charges and transactions removed from your account.
This is something the business will help you with.
However, do your part by explaining what happened and showing them which charges are bogus.
If you’ve been the victim of multiple fraud, repeat the same steps above, and make sure to keep all confirmation letters that these businesses send you.
The business establishment might ask you to furnish them a copy of the identity theft report you filed or ask you to complete a complaint form.
In either case, keep a copy of the form. You should keep a copy of all forms, letters and documents you submit to the establishment so there’s no confusion later on.
Writing a complaint letter Hacks
Specify in your letter who you have contacted and when
Always ask for a credit freeze.
Do this even if you haven’t noticed changes in your account.
This will make it harder for the thief to use your account or create an account in your name.
If you do request a freeze, know there will be extra steps needed when you apply for a cell phone service or a new credit card.
It will happen anytime a service requires a look at your credit.
Not asking for a credit freeze isn’t recommended, but if you opt for that, at least send out a fraud alert to the proper authorities and establishments.
File your taxes as early as possible before the scammer does it before you.
Otherwise you could become a victim of tax identity theft.
Tax identity theft occurs when someone utilizes your Social Security number to get a job or a tax refund.
If you get notices from the IRS concerning any irregularities, respond to them immediately.
Better yet, inform them that you have been the victim of identity theft.
They will then be prepared for any tax identity theft attempts.
Do not believe anyone who says you’ll be arrested by the IRS unless you pay for the debt or the taxes that were incurred.
Don’t listen to them even if they have your Social Security number.
There’s a process to be followed.
Once you’ve filed the reports, conduct follow ups regularly.
Although your bank will probably notify you of any updates.
Keep a close eye on your credit reports for any irregularities.
The most important thing to remember is not to panic.
However, the longer you take to do something, the greater the damage.
What Will it Cost Me if My Identity is Stolen?
The dangers posed by identity theft are real. If you don’t handle it properly, it could lead to financial disaster and legal trouble.
The first thing you need to realize is that identity theft can happen to anyone.
It’s not just rich people who are targets.
Cases of identity theft have been rising.
It’s imperative you protect yourself. Identity theft is not just a nuisance as it can do a lot more damage.
Financial Consequences of Identity Theft:
ID thieves usually go after your credit card.
This can lead to numerous financial ramifications.
As the FTC has noted, ID theft can result in you owing thousands of dollars in debt.
It can scar your credit score.
Also, it will impair your credit history.
ID theft could lead to denials in mortgages, loans and employment opportunities.
This will affect your ability to open a bank account.
It’s possible you could end up with errors in your financial statements for months or years.
There’s also the fact that losing your ID could lead to life threatening situations.
Medical ID Fraud Ramifications
Victims of medical ID fraud will have a difficult time getting prescriptions.
If you’re taking medications for a serious medical condition, the situation can be life threatening.
Medical errors may also occur because of incorrect data under your name.
Medical ID theft makes sorting out your health records very difficult and time consuming.
If you need constant treatment, this will have a detrimental effect.
You could even face legal charges if you can’t prove there was a theft.
Legal trouble with medical ID theft usually happens if the ID thief gets cited or commits a crime using your name.
If this happens, you could be liable for the crime even if you weren’t involved.
How to Protect Myself from Identity Theft
First of all, you must guard any and all personal information you use online.
Most people today do their banking and shopping online.
Therefore, your passwords and account numbers are vulnerable to ID thieves if you don’t take care of them.
Prevent ID theft Hacks
Use alphanumeric passwords. Jumble them up so hackers won’t be able to guess them easily.
Do not give your password to anyone.
Change your passwords and logins monthly.
Do not login to your bank or shop online on a public computer.
Pay with your credit card since they are under the protection of Federal Law.
Be wary of phishing, which attempts to trick you into giving personal information.
Phishing uses pop ups that appear like real banks or financial institutions.
They are accompanied by a letter requesting for personal information.
Ignore these messages because banks will never ask you to submit sensitive data in emails.
Check your bank and credit accounts regularly.
This way you’ll know immediately if something is amiss.
If you notice a purchase you didn’t make, notify the bank immediately.
Check your mailing address with the proper financial institutions and the post office.
ID bandits usually fill change of address forms to keep you off track.
Check your credit report during and after an ID theft.
It’s a good idea to check your credit score even if you haven’t been victimized.
If anything’s amiss, you’ll know it quickly.
Store sensitive files and documents in a secure place.
Shred outdated ones.
Don’t just throw these papers in the thrash.
Get a shredder and destroy outdated credit card applications, bills, bank statements and any document that contains personal information.
Check your junk mail because they might contain personal data too.
When to use a company for ID theft protection
Some companies, for a fee, will provide ID theft protection.
Is this necessary?
The answer depends on your activities and how vulnerable you are.
- If you spend a lot of time shopping online
- You don’t have the time to check your personal information
- Reporting and coping with ID theft is stressful and time consuming. Investing in ID protection might be a good option.
If you’re interested in paid ID protection, keep in mind that this will cost you.
Remember, no matter what the ads may say, it’s not 100% guaranteed you won’t fall victim.
If you decide this is what you want, be prepared to spend time researching the various options available.
Things will be a lot easier if you opt for the ID protection services provided by your insurer or bank.
Most banks will notify you if there are any large transactions or purchases that transpire involving your credit card.
Some of them even offer to pay insurance or legal fees in the event of fraud or ID theft.
Some insurers bundle ID theft protection with auto or home coverage.
Keep in mind these offers usually have exclusions.
Therefore, read the fine print before agreeing.
You’ll also find specialty companies who advertise themselves as ID theft specialists.
They offer a wide array of reactive and preventive tools to keep your credit and identity safe.
Features vary among these companies.
However, they usually have some type of fraud alert built in.
They’ll notify the appropriate credit bureaus so action will be taken if you become a victim.
What makes this feature useful is it will force the bank to balk or proceed cautiously for any credit request.
Apart from fraud alerts, these companies can also conduct credit freezes.
These are far more effective than alerts.
When your account is frozen, it prevents companies from getting to your credit.
It effectively locks your records against a new creditor.
Credit freezing rules vary, and it’s certainly inconvenient.
However, if you’ve been the victim of ID theft, this is the best option available.
While this is something you can do on your own, having a company do it for you can be handy if you don’t have the time or don’t want to mess around with the paperwork.
Whether you get paid ID protection or do it yourself, make it a point to take care of your checkbook and other financial data so no one is able to access them.
Banks and financial institutions will do everything they can to protect you.
However, you also need to take steps to protect yourself from these ID thieves.
Identity theft protection is essential
Identity theft protection is a necessity and not something you should ever take for granted.
Usually, when we read about it the assumption is that “it will never happen to me.”
That’s not how you should think because as has been repeatedly stressed by the authorities, ID theft can strike anyone.
When you take measures to protect yourself, you reduce your risk.
It can seem to be hard to get a Credit Card with Bad Credit.
While a good credit history is vital in getting an approval on a credit card application, there are ways where you can still get a credit card with bad credit rating.
This article will explain your next credit card option.
It is very hard to effectively function these days without a credit card.
How can you make internet purchases?
How can you check in a hotel?
It is very unlikely for a modern person as to not have the experience of having a credit card.
A more realistic problematic scenario is a person may have abused his credit line.
This may result in applying for bankruptcy or having collection issues.
The real question is on how to get a credit card with bad credit rating. Earn Money from Home
Pre-Approved vs Pre-Qualified Credit Card
You can always try applying for an additional credit line.
You will encounter two terms that sound similar but have entirely different meanings.
These are the terms “pre-approved” and “pre-qualified”.
Understanding the difference between the two will give you an idea as to what stage of the credit application you are in and will avoid the build-up of high hopes, wrong expectations and emotionally draining disappointments.
Most lending companies offer pre-qualification services as a means to get you enticed on filing a loan or credit card application.
It basically involves supplying all relevant information about yourself so that the lending company can tell you what sort of credit card, specifically described by the amount of credit limits and other flexibility, that you can apply for that is befitting your financial credentials and situation.
By no means does a pre-qualification guarantee an approval as one’s credit rating has not yet been taken into consideration at this stage.
No inquiries have been made regarding your credit history.
The lending institution has no sufficient reference to your paying habits.
Most pre-qualifications are done on the phone or online.
And the basis of the pre-qualification are only with references to the information that you have supplied.
Regardless of whether the info you supplied were truthful, the lending company will still investigate on five important factors that will make up your credit score.
- Did you make your due dates
- Have you used up your credit lines
- How long you have maintained your credit lines
- Your most recent credit account or application
- The diversity of your loans
Once the lending company has checked on these matters, they are now in a position to give or deny an applicant pre-approval.
In every sense, the term pre-approved has a very heavy meaning versus the term pre-qualified.
While a pre-qualification will provide you with the opportunity to apply, a pre-approval will ensure you of approval if you apply.
How to Get Credit Card with Bad Credit
Secured Cards vs Unsecured Credit Cards
If you know that you have been missing due dates, then even if you get pre-qualified, you know what’s going to happen after you submit your application.
The lending company will get your credit rating from Equifax, Experian or TransUnion.
And if your credit is as bad as you expect it be based from your credit misdemeanors, your application will be denied.
A credit rating is a three digit number, ranging from 300 to 850 points.
Credit approval and denial
- A credit applicant with a credit score between 300 to 580 points will most likely get a denial.
- One that has a credit score between 581 and 650 will have a chance of approval but only for the highest and most costly rates.
- A credit rating in the range of 651 to 710 will qualify one for credit at moderate interest rates.
- A credit score is from 711 to 750 will qualify an applicant for credit at competitive rates.
- The best scenario of a score of 751 or higher will gain the lowest rates in the market.
If you have not been making your payments on time and have all your credit lines used up to their limits then, you’ll probably fall on the first category and will get denied but you can still have an option in getting a credit card. Equifax, Experian, and TransUnion
Two kinds of credit cards
Secured credit cards and unsecured credit cards
Unsecured credit cards are those credit arrangements that are based on trust which is founded by a sufficient paying capacity and a healthy credit history.
We already have identified what a healthy credit history looks like.
It ranges from a credit rating of 581 points to 850 points with the highest scores gaining the best credit deals and options and the worst scores getting the highest rates with the least flexibility.
Credit ratings from 300 to 580 are high risk borrowers and won’t be approved for an unsecured card.
But, never think of a denial as a punishment for your credit demeanors.
Lending companies are businesses that are out to make as much money as they can.
They want you to use their credit card but can’t simply trust you to pay when your bills are due.
They are more than willing to give you a secured credit card where they can simply pull out from your secured deposit an amount equal to your unpaid balance if you fail to pay for it on its due date.
A secured credit card works this way.
You make a “non-withdraw-able” deposit of say $500 dollars to secure a credit card that will also have a $500 credit limit.
You have to sign some documents allowing the lending company to withdraw an amount corresponding to your unpaid balance upon failure to pay it on its due date from your deposit and apply it to the loan.
In this set-up, the lending company will benefit from your business risk-free and you get to enjoy the advantages and convenience of a credit card for purchases and satisfy the credit card requirement on hotel accommodations, car rentals and the likes.
A secured credit card is not a post-paid or debit card.
While it offers the same safety features of a debit or prepaid credit card for both holder and lender, its transaction records are reported to the various lending bureaus to be incorporated in your total credit rating like a normal credit card usage.
In a way, you can use secured credit cards as a means to alleviate your bad credit reputation.
Giving banks what they want
For the risk of giving an applicant an unsecured credit card, the bank is basically looking for two things.
The applicant must be in a position to pay off the credit card to the full extent of the limit with his income.
This will take out the risk of non-payment due to insufficient funding.
You will need to show information about your employment or own business.
They will verify claims about years of employment and salary.
They will check and business tax reports if you own your own company.
Applicant must be in the habit of paying his debts and paying them on time.
When the bank is satisfied with the information and confident you have a steady enough income to be able to pay for the extent of the credit limit they have in mind, they will look at your credit history.
The bank will be very particular about your credit rating.
This system of describing credit health was developed by Fair Isaac and Company.
They established the idea of machine-generated data to determine credit worthiness.
By the 1989, the company was able to formulate the equation behind the credit rating that is still being applied today.
Fair Isaac and Company didn’t see the need to let the public know on the process and the components that make up the three-digit score.
It was only during the early part of 2000’s, with much pressure for the United States Congress and private industries and consumers that they revealed to the public how they come up with ratings.
We are going to discuss the five components while we discuss the topics on the details of what the banks are actually looking at.
As we said earlier, banks are not only looking at an applicant’s capacity to pay for a certain credit limit but would want to see a numerical description of how likely is an applicant going to pay a loan if he has the financial capacity to so because.
Being able to pay and wanting to pay are two different things.
7 Credit Items Banks look at
The bank would like to see how true you are to your word, especially in the aspect of paying a debt.
It’s not just a matter of paying your credit card dues, paying them on time is very important as well.
When you receive you credit card statement you will notice that the lending company is giving you two options to settle your present billing.
If you cannot pay the total amount due for the cycle, they are giving you a minimum amount of payment and you can pay for.
Anything from that minimum up to the full balance will cover you for that cycle.
While paying the minimum amount or anything more is allowable, you will have a slight dent on your credit rating.
Even if the lending company is offering you this leverage, the original credit deal was that if you used your credit card for a purchase.
It’s only a deferred payment where you have to pay for the whole amount of the purchase at the end of the cycle.
If you fail to do that, it’s a case of breaking your word which creates a negative mark on your credit worthiness.
For purchases that you know you cannot pay in full by billing date, register them under installment credit where you can pay for the full price in installment basis.
These feature come with zero-interest anyway.
If you do this, the installment amounts will be spread in several cycles that you can handle.
Length of credit
The bank would like to see a genuine habit of prompt payment.
A good habit can only be established by years of good practice.
One year of prompt payments is not enough to establish that you are in the habit of making prompt payments.
It only tells the bank that for the past twelve months you have paid on time.
Three years of this practice will tell the bank that you are likely to pay on time.
Five years, can already be reflective of your personality that you are indeed a responsible borrower who make payments on time.
This is the reason why everyone needs a credit card more so if they don’t need it.
And that’s because, people need to establish a good credit score so that when the time comes when they have to make a major loan, an investment like a home mortgage, a car loan or a study loan that is life-changing.
They can have a high chance of approval for the best rates in the market.
Diversity of credit
There are credit card purchases that are on a deferred payment scheme and there are purchases on a credit installment scheme.
There are also cash loans that are drawn from your credit card.
How do you tell which purchases will go to what and monitor which billing will fall in which cycle?
Figuring all these things out require financial sensibility and organization skills which the bank is also looking for.
If you have a credit card, it would be wise to study each purchase carefully and try to figure out which credit card scheme it will best fit it.
Small recurring purchases like gas and grocery should paid on a deferred payments scheme.
Big one-time purchases like a washing machine or a cell phone will best be paid on a six-month credit installment scheme.
Emergency expenses like car repair is best placed on longer credit installment schemes like cash out which can extend up to two years of monthly installments.
According to John Ulzheimer, president of Consumer Education at SmartCredit.com, the debit-to-credit ratio is one of the most important measurements in your credit score.
To compute for it you have to divide the aggregate outstanding balances of all your credit cards by the total limit across all the cards.
With this computation, the more you use the cards closer to their limits, the lower your score will be.
It might seem a bit odd to discourage usage but if you look at it closely, it has nothing to do with it because the purpose of the credit card is really for deferred payment which a person is expected to pay off after every cycle.
There should be no balance in the first place. If you look at it on the standpoint of a lending institution, it is very risky to extend a loan to someone who is also busy paying off other loans.
If the credit limit is reflective of what a person can pay based on his salary, imagine the impact of having multiple credit cards stretched to their credit limits to pay.
There will come a time when that borrower will have to choose which card he will pay and which ones he will ignore.
An approving bank would not want to do business with this guy at this stage in his credit career.
The truth is this; if an individual is not in financial difficulty, he won’t be paying minimum in each cycle and continue on using the card up to the full extent of its limit.
Chances are this person is already using the few remaining available balances in his cards to pay for his living necessities because his entire salary is already exhausted in paying minimum installments for his credit card billings.
And, you can tell a person is really desperate, when he decides to apply for another credit line at this particular situation to create an even deeper hole for him to get out of.
The debt-to-income ratio is the way lending institutions measure an applicant’s ability to pay for the purchases he incurred on deferred payment.
To calculate for this numerical information, you have to add up all of the applicant’s monthly debt payments and divide the sum by his gross monthly income where the gross monthly income is the amount the applicant is earning before taxes and other deductions.
A credit card puts you in this scenario:
You will be placed in a situation where your monthly income should be enough to pay for your current needs as well as your monetary obligations from you previous month’s expenses which you chose to pay today.
It’s like paying for today’s and yesterday’s expenses all with your present month’s salary.
Lending companies would like to make sure that your financial condition can accommodate this duplicity because when a choice has to be made between survival and the credit card dues, a person will naturally choose to buy the current necessities versus paying debts.
It is very bad business for a lending company to extend a credit line to a person who is on the verge of making this decision.
The age of your credit lines also play a very important role in determining your credit worthiness.
If you have recently applied and have recently been approved by another credit card company, it is a bit suspicious why you would be applying for another credit card.
The point is this, if a credit limit is reflective of the amount that you can handle based on your income and credit score.
Wanting to have two of these limits in two cards will suggest that you have intentions on borrowing an amount which is double of what you can pay.
This scenario would be more exaggerated if you have several other cards that are full.
All the items discussed in this section except for item number 5 about credit-to-income ratio summarizes what’s in the three-digit number called the credit score.
As a review, the components of the credit rating are as follows:
Thirty-five percent (35%) weight is given to your prompt payments
Thirty percent (30%) weight is given to your debit-to-credit ratio
Fifteen percent (15%) weight is given to the length of you credit history
Ten percent (10%) is affected by new credit lines that you have opened
And the last ten percent (10%) is based on the diversity of your credit accounts
What if I’m under 21 years old?
The Card Act of 2009 imposes strict limitations to lending companies with regards to issuing credit cards to minors (issuing Credit Cards under 21 years old).
It states that an applicant must be at least 18 years old to qualify.
A person under 21 years old will have to show proof of independent income or assets to show that he will be capable of making minimum payments.
Or, he should have a cosigner who will share the obligation with him.
Otherwise his only choice is to be approved by his parents or guardian to be an authorized user of their credit card.
If it so happens that the young applicant’s income is enough to qualify for a credit under his name, he is solely responsible for making his payments.
In the case of having a co-signer or being an authorized user, the other individuals involved will share his financial obligations.
Whether the young credit card applicant gets an approval for an independent credit line, becomes an authorized user or gets a co-signer all transaction records and payments made will form part of his credit history that will affect his credit rating.
For parents who want to give their 18 year old son or daughter a credit card to use while he or she is out for college or want to start them off in creating good credit ratings.
Best option is to help them apply for a secured credit card that will help keep their credit card use at bay and ensure of positive marks for their credit score.
Their credit score that will help them in the more important loans they will need later on in life.
The challenge for parents is to figure out the right secured credit limit.
Before we end, it is important to stress one very important point.
Approving credit card applications is something every lending institution wants to do.
It is in these credit approvals where their business thrives.
If ever lending companies reject an application, both applicant and approving bank losses on the opportunity.
These are just some of the decisions that they have to make to minimize possible losses.
If you have honest intentions and all you need is the convenience of a credit card then you can still get a credit card with bad credit rating.
All you need to do is secure the line with a non-withdrawable deposit which you will authorize the bank to draw upon in case you default on your payments.
When you don’t qualify for a credit card, request for a secured credit card instead.