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Question and Answers: Frequently Asked Questions About Credit Cards
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CreditFast.com answers and posts commonly asked credit questions from our visitors.
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Should I use a credit card or a prepaid debit card?
Sue K. - Omaha, Nebraska
Credit card companies use state-of-the-art, high-tech, and encryption software. Most banks will cover all charges that result from unauthorized use of your credit card. Be aware in the United States that some banks may limit your liability to $50.00. Credit card companies have more resources and safeguards to prevent credit card fraud than most prepaid companies.
Prepaid MasterCard and Visa cardsare used much in the same way as credit cards. The difference is a prepaid account must have money deposited before the card can be used. Generally people who have prepaid accounts have poor credit. The benefit of having a prepaid card is that it can be used to make deposits on things that require a credit card. Placing a reservation on a hotel room is an example. The disadvantage of prepaid credit cards is that they do not report to the credit bureaus.
What are the credit score point ranges for bad credit, fair credit, good credit and excellent credit?
Anthony R. - Somerset, New Jersey
Listed are the point ranges for different credit levels.
Excellent: 750 - 840
Good: 660 -749
Fair: 620 - 659
Bad Credit: 340 - 619
Is it better to have a high or low credit card limits?
Richard T. - Sausalito, California
It does not matter so much if you have low credit limits or high credit limits. What matters is how much of those credit lines are being used. The general rule is not to use more than 30 - 40% of your credit limit on each of the credit cards you have. This gives the perception that individuals who do this do not need credit to get by. This will help to raise or keep a credit score high.
Is it bad to have twenty credit cards?
Tim S. - Germantown, Tennessee
It is not recommended to have twenty or more open lines of credit. Numerous open lines of credit is viewed by the credit bureaus and creditors as too many potential risks to run into debt. One way to improve a credit score in time would be to cancel a few accounts. Longer existing accounts hold more value on a credit report it is wiser to cancel a more recent account. Other cards worth cancellling are credit cards that offer no reward benefit or charge an annual fee. Keep in mind canceling credit accounts will initially lower your credit score. If you are planning to apply for a car or personal loan you may want to postpone cancelling accounts.
Are credit repair companies legal?
Layla T. - Detroit, Michigan
No, credit repair companies are not legal. Many times these companies promise results that can not be obtained legally. Unfortunately some participants in these programs have claimed they received no positive value and no means in which to receive a refund.
The only way to repair credit legally is to correct inaccurate information that is damaging your credit on your credit report. It is recommended to handle this situation on your own by writing each of the credit bureaus about the discrepancy found. If you have multiple discrepancies you can hire a legal company that will simply write the dispute letters for you.
Where can I get my credit report fast?
Lisa S. - Janesville, Wisconsin
Most credit card sites now offer instant fast access to your credit report.
How do you get rid of debt fast?
Jose V. - Los Angelos, California
Make some kind of settlement with existing accounts. There are Four Ways to do this.
- Hire a debt consolidation companyto lower the balances owed on debt, and set up a payment schedule. This method is ideal for individuals who have multiple accounts with debt more than five thousand dollars.
- Call the company you have the debt with, negotiate and lower debt, and set up a payment schedule.
- Call the company you have the debt with and pay the whole amount in full. Schedule a payment arrangement or pay the amount in one payment. Doing this will look the best on a credit report when the debt is settled.
- File for bankruptcy. Bankruptcy should be a last resort to handle debt. For some individuals this is the best course of action. Consult a certified financial planner on whether it would be in your best interest to file.
How do you raise your credit score fast?Kate B. - Nantwich, England
The fastest way to raise credit is to start new positive credit. Often people in this situation need to start over and apply for credit cards in the bad credit category. A person should acquire at least two credit cards and use no more than thirty - forty percent of the assigned credit limit of each card. Once the credit cards have been acquired it is important not to have any more credit inquires on your credit report, unless absolutely necessary. In six months an individuals credit score should show improvement.
What are easy approval credit cards?
Terry L. - Boston, Massachusetts
Easy approval credit cards or fair credit cardsare designed for people who are not in the bad credit category and not in the good credit category. The easy approval category would apply for those that have limited credit as well. These credit cards are designed for people that have a credit score range of 620 – 659. These cards have no fees or lower fees than most bad credit cards. Sometimes people with slightly lower credit scores than the range listed can be approved. People that have a few blemishes on their credit reports can generally get approved for these cards.
Will canceling inactive credit cards improve my credit score?Laura S. - Phoenix, Arizona
No, closing a credit account you have paid off can hurt you. A credit score is affected by how much credit you have in comparison to total debt. Cards with 0 balances and available credit on them will raise your available-credit-to-debt ratio. Longer existing accounts hold more value. Cancelling older credit accounts can lower your credit score further. A person can experience less of a credit score drop effect if they cancel a credit card after they received an increase from another credit account.
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