Debt Consolidation and Credit Card Counseling

Obtaining Credit
The first step in earning credit is to open a checking and/or savings account. Maintaining a small balance for a few months without overdrawing your account begins to help you establish credit. Most accounts now offer withdrawal protection, and this is a form of credit, albeit a small one. By not overdrawing your account, you are beginning to establish that you are creditworthy.

You should then pursue a credit card from a department store. These cards are usually easier to obtain than a major credit card, such as Visa or American Express. Provided that you have a stable job, you should be able to obtain a department store card without too much trouble. One you obtain this card, make a small purchase every month and pay the bill in full. This is known as unsecured credit, as you have pledged no collateral against the loan. After six months to a year of making small purchases with this card, you should then be able to obtain a major card, such as Visa or American Express.

It’s important to have and maintain good credit as more an more employers are conducting financial checks on people prior to hiring them. Companies are skeptical of hiring people with financial history problems, as they are seen as representing risks to the company.

If your credit is already damaged through prior debt problems, you can try to obtain what is known as a secured credit card. These are credit cards that have the credit limit backed by cash. Your bank may offer a secured credit card. To obtain one, you agree to put a certain amount of money, say $500, into a savings account with that bank. The bank keeps the money in your account and pays you interest in exchange for granting you a with a limit that matches the amount in the account. That way, the bank has access to your funds should you default on your payments.

Secured credit cards are one of the best ways for people with credit history problems to begin to
reestablish credit. Beware, however, that there are many scam artists who prey on unsuspecting victims. These people advertise that they can offer a credit card to anyone, regardless of their history, without mentioning that they often charge outrageous fees, that they don’t accept everyone, and that the interest rates and late fees associated with their cards are much higher than the industry average.

The best thing to do if you are trying to obtain secured credit is to contact your bank. If your bank doesn’t offer secured cards, you might ask them to refer you to an institution that does offer them. You may also contact the BankCard Holders of America, as they can provide a list of legitimate institutions that offer secured credit cards. To obtain the list, send $4.00 to:

Secured credit card list
BHA Customer Service
524 Branch Drive
Salem, VA 24153

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