Improve Credit Rating With Prepaid Credit Cards
Friday, November 7th, 2008Before using a prepaid credit card you have to pay for it, thus the self-explanatory identification on the card.This type of credit card requires you to deposit or pre-pay a specified amount of money, sometimes called a “security deposit,” in the bank of the card issuer.In most cases the required amount is between $200 and $500.00 and your credit limit is equal to the amount of your security deposit.
With traditional credit cards, you apply for credit and receive approval or you are denied based on your credit rating, then if approved, you are issued a credit card with a specified line of credit.Traditional banks usually will deny the use of a credit card or line of credit to those who have a damaged credit rating or no credit.
The issuers of prepaid credit cards may ignore the rigorous credit rating requirements used by traditional lenders and in some instances they may not even do a credit check or make verification of your employment.Your credit card’s line of credit is guaranteed by the security deposit which you made before receiving the card, so the card’s issuer will receive payments if you happen to default on them.The prepaid credit card is a good way to establish credit or rebuild poor credit and nearly everyone is eligible because these cards are guaranteed for payment by the prepaid credit card deposit.Prepaid credit cards have a high approval rate because the overall restrictions on them are few, there could be age restrictions or U.S. citizenship may be required.
Prepaid credit cards can be used just as you would use traditional credit cards, anywhere that VISA and MasterCard is accepted these cards can be used with ease.These prepaid credit cards can be used to pay bills online or on the phone or to access cash from an ATM machine for any purpose or they can be used to do online and offline shopping.