An unsecured credit card is a type of credit card which does not require any collateral amount. This means that there is no need for the customer to pay any security deposit to the bank or the company. In general unsecured cards are discussed everywhere because they are purchased by the people having good or excellent credit. If any individual wants to avail unsecured credit card but has bad credit score then his application will be get rejected. This is because in Unsecured credit card there is a high credit limit. Companies and banks cannot trust a person having a low credit score as the credit score tells a lot about the individual applying for the credit card. These cards are also called as Credit Cards for Excellent Credit.
Let us first understand why a credit score is so important in real life:
Going by definition, a credit score is the outcome of how an individual manages his debt. The way an individual does his repayments, this can directly affect if he can get an unsecured credit card in future or not.
Practices like timely repayments can push the credit score in a positive direction. The application of the credit card mainly depends upon the credit score. There are a lot of benefits of having good credit score like low-interest rates on loans and credit cards, fast processing, higher credit limit. Thus, the credit score can play a crucial role in providing financial freedom.
What a person can do to improve his credit score?
The first step in improving the credit score is getting detailed information about it. Any individual can check online or contact credit bureaus regarding this query. Other than this, below are some actions that can help in improving the credit score:
• Start paying bills on time: In the credit report, there is a detailed analysis of how a person pays his regular bills. Banks in mesa Arizona and Companies are very interested in knowing this as this tells the behaviour and seriousness of a person towards his debt. The previous payment performance is considered as future payments performance. Doing early and full payments can put some plus points in the credit report.
• Buy a secured credit card: A secured credit card is designed to improve the credit score. When the credit card was introduced a lot of people faced problems due to a low credit score. Thus, to solve the problems of people with bad credit and beginners, this type of card was introduced.
The bank issues credit to the customer and he can purchase services according to his need. The cycle continues until the customer defaults any payment. When there is late payment, the customer is charged with the interest and if he is further unable to do the payment, the credit card provider recovers the payment from collateral. After the good performance with the secured credit card, the bank can promote customer to the unsecured credit card. This way a secured credit card can help in building credit.
This way a person can improve his credit score and get approved for the unsecured credit card. Now let us check why a person should use unsecured credit card:
Lower interest rate: As in the case of unsecured credit card, a customer avails a huge amount of credit on an annual basis. Thus, to provide more benefits to the customers, companies keep their interest rates low. The companies can easily trust their customers when there is excellent credit.
Building credit scores faster: While secured cards also help in building credit but that process is too slow. By using unsecured credit card and using thirty percent of the balance, a person can build his credit faster.
Rewards: Rewards are an interactive way to keep the customers busy with the card. As the customer uses his card, he gets more rewards for his purchase. In some cards, there are milestones established. This means on achieving them, customers can unlock more benefits.
Multiple cards: When a person makes his credit score excellent, he is able to use a wide range of cards. Except for the usage of general credit cards, he can also use cards based on particular services.
Increment in purchasing power: As these cards have higher credit limits, the Customer is free to use available credit. But it is said that a person should not use more than thirty percent of the credit available. This helps in easy repayments and the credit improves with a faster speed.