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Getting a Credit Card With Bad Credit in a Tight Market

November 2nd, 2009 · Credit Cards, Credit Repair

Getting a credit card in a good economy is a very easy task. In a good economy, companies will extend you credit even if you have a poor credit score. The credit these companies extend will not be good (i.e., the credit card will have numerous fees and an extremely high interest rate), but these companies will still be willing to hand out credit cards. However, in a down economy, credit cards are not as easy to come by.

In today’s economy, companies are not lending much to consumers with good credit; they are even less likely to overlook credit score mishaps when evaluating whether to approve you for a credit card. If you have bad credit, how do you get a credit card in a tight credit market?

Repair Your Credit
The simplest and most obvious answer to this question is to repair your credit if you have bad credit. Repairing your credit will not only enable you to have a better chance of obtaining credit in a tight credit market, it will also help you in the long run to obtain a loan for a big purchase (e.g., a home, car, etc.) and/or a big event (e.g., a wedding, college education, etc.). As such, cleaning up your credit is one of the best things you can do for your financial future. Coincidentally, repairing your credit will also help you get a credit card in a down economy.

Shop Around
Another way to obtain a credit card in a tight credit market is to shop around at various banks, banking institutions, and financial institutions. Even if the general consensus is that the credit market as a whole is “tight,” this does not mean that every credit granting institution is cutting back or otherwise curtailing their credit card business. You may have to look to uncommon banks or financial institutions, but you should be able to find a company that is willing to give you a credit card. One suggestion is to join a credit union, they often have overlook credit blemishes when extending credit to their members.

Take Advantage of Existing Banking Relationships
Talking to banks with which you already have a relationship can also help you get a credit card in a tight credit market. In a down economy, banks are more willing to extend credit to customers that have an established track record with that bank. However, this does not mean that new customers have no options. Banks will often offer new customers a deal (such as offering a credit card when that person opens a checking account) to entice such customers into becoming long term clients.

Summary
There are many things you can do to get a credit card in a tight credit market. It is important, however, to note that you should not settle for a bad credit card merely because the credit market is “tight.” If you are in the market for a credit card and it does not seem that any good credit terms exist on any credit card offers you have investigated, you should reevaluate your need for a credit card at that particular moment. If your credit issues are more of a “want” than a “need,” wait until things get better before getting a credit card. If, however, the opposite is true, make sure you pick the better of the two evils.

Do you have more tips on finding good deals in credit cards for people with less than perfect credit? Tell us about it by leaving a comment!

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Ten Halloween Costume Ideas for Those on a Budget

October 30th, 2009 · Budgeting

HalloweenThis year the only thing that may be scarier than a great halloween costume is the current economic forecast! If your household is feeling the affects of the recession, you may want to consider passing on that exotic (and expensive) costume rental or buying brand new costumes for all the kids. With a little creativity and imagination, it is likely that you can put together a unique costume simply with items you already have at home, or can find cheap at a thrift store, and be the hit of the party. Not only will this save precious dollars, but the use of recycled materials is eco-friendly and benefits the planet as well.

Here are ten costume ideas for budget-minded people this Halloween:

  1. Mother Nature. Use an old skirt and blouse and adhere a bunch of silk (or even real) leaves, small twigs, flowers, etc. to the clothing. Accent it was a fake bird on your shoulder. If you want to get more exotic, create a hat with a birds nest on it. 
  2. Christmas Present. Find a cardboard box that fits nicely around your midsection. Cover it in wrapping paper and a bow, make a couple shoulder straps with ribbon and sling it over your shoulders!
  3. G.I. Joe or Jane. Most of us have some sort of camoflauge clothes (or know someone from the military and can borrow). If not, thrift and surplus stores usually have plenty of cheap ones available. Use camo face paint and you’ll be incognito!
  4. Cereal Killer. This one is cute; take empty cereal boxes (can use the mini-type) and slit them, insert plastic knives and pin them to a white t-shirt. Use some red paint to simulate dripping blood.
  5. Dirty Laundry. Take an old laundry basket and cut a hole in the bottom big enough to slide over and rest on your hips. Fill it with dirty laundry as desired!
  6. Bag of Dog Food. Hopefully you own a dog and if you purchase the large 4o+ pound bags of food, just empty out the bag and slit the top and bottom of the bag and slide it over your midsection (you might want to sponge out the crumbs). Put a dog collar around your neck and a bone in your mouth, and you are good to go!
  7. A Bunch of Grapes or Jelly Beans. A simple costume involving a large clear plastic trash bag and balloons. Cut holes for your legs in the bag bottom and a couple arm holes. Stuff appropriate colored balloons in the bag, tie bag loosely above shoulders with a ribbon or drawstring.
  8. A Ghost. This one of course is obvious, popular, too easy, but bears repeat. Cut some holes in an old white sheet and off you go! Make it a little unique even, and “dress up” your ghost with some eye-makeup or lipstick as well.
  9. Static Cling. Dress in all one color (black or white works best) and simply pin miscellaneous clothing items (such as socks, underwear, etc.) and dryer sheets to your outfit. 
  10. Unemployed Person. No costume required, just make a sign and put it around your neck and dress as usual, LOL.

Readers, do you have additional ideas for easy, cheap homemade halloween costumes? If so, share them by leaving a comment!

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Facecard Pre-paid Card Teams Up With Facebook

October 29th, 2009 · Banking, Credit Cards

For those that are unfamiliar with Facecard, likely you won’t be for long, thanks to the name recognition provided by Facebook, the popular social media network. Facecard is a pre-paid card issued by MetaBank, who launched the program in May of 2008 as an alternative to debit and credit cards. Can you say “marketing genius”?

According to the card issuer, Facecard “promotes responsible spending and provides real time discounts at the time of purchase called Prewards.” The card to date has been used primarily by students, whose parents simply load their Facecards with cash using their computer or mobile phone, while utilizing the parental controls to monitor their spending habits with a web-based dashboard. The card can be used anywhere Mastercard is accepted, and does not have any risk of overdraft fees. A good analogy might be that it is like giving kids an “electronic” allowance of sorts, where you can monitor and even regulate their spending habits, while perhaps giving them some controlled training in handling a real credit card in the future.

In early October, Facecard announced a new Facebook app that card holders can download directly. The app is called Facecard, and allows you link your Facebook account to your Facecard and use it to transfer money to other Facebook users (similar to PayPal) — but the advantage is it is built right into your social network. With the new app, money can be disbursed to others in three new ways:

  • Sending “money messages”
  • Donating money toward another Facebook user’s “wish list”
  • Sending money toward a real “thinking of you” gift

As far as the cost for this card, according to Facecard a new fee structure was just implemented as of the fourth quarter of 2009. The charge to sign up is $5 (previously free), with a monthly fee of $3 required to maintain your account. The monthly fee can be waived if you load your paycheck via direct deposit on to the card, or if you spend at least $100 a month using your Facecard. 

Face it (sorry, couldn’t resist); it was inevitable these two would team up. The pre-paid product certainly seems to be doing well and deserves its own place in the large “deck of cards” available to consumers. The fees do not seem to be too outrageous, and the convenience a worthwhile benefit for many individuals. Readers, what is your opinion of this product? Has anyone out there used it in conjunction with Facebook? Share you experiences with a comment if so!

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Is the Credit Scoring System Fair? A Viewpoint Which Disagrees

October 28th, 2009 · Consumer Info, Credit Reports

I’ve heard many people complain bitterly about the American credit scoring system. There are many arguments for and against the system. Yesterday, I talked about the merits of the credit scoring system. Today I will give arguments against the system.

Proponents of the system will argue the credit scoring system is an equal yardstick for everyone. They also argue that people with poor credit deserve it because they’ve acted irresponsibly. Lenders love the system because it saves them time and money in the evaluation process (and they also say this saves the consumer money, but that’s an argument for another day).

Critics of the system decry it for the following reasons:

  • The credit reporting system is prone to errors. Numerous studies have shown that almost all credit reports contain erros, and 30% of them contain serious errors.
  • Not all credit issues are truly the borrower’s fault. Examples: identity theft, crippling medical bills or extended periods of unemployment.
  • Consumers are penalized for 7 years or longer for a brief bad financial run of as little as 3 months.
  • Correction of surprise credit reporting errors can take months, which may result in delay of home or auto purchases. In the case of home purchases, if the buyer has found a fantastic bargain, they may lose it because they are unable to get quick financing.
  • The method to correct credit errors is not just time-instensive, sometimes the credit bureaus will not correct error no matter how much evidence you send them. This is because all disputes are computerized. Most of the time the credit bureaus have not even contacted the people who are mistakenly putting harmful information on your credit report. 1
  • Bickering and competition between the main personal credit bureaus has resulted in multiple scoring systems. Fair Isaac’s FICO score is the one most used by lenders. Unfortunately, the credit bureaus most known to the public, Experian, TransUnion and Equifax, use the VantageScore system which has a different credit score range and criteria than the FICO score. This can confuse the consumer and often lead to assumptions that their credit scores are better or worse than the reality.
  • Credit scores are now used to determine national security risks, insurance premiums and employment desirability. Many people think credit is unrelated to these other areas of a person’s life and is not fair reflection.

In addition to these criticisms, it’s impossible for a consumer to know exactly what will make his or her score go up or down. Fair Isaac and the big 3 credit bureaus have not released the exact details of what goes into their scoring model. Only general guidelines have been given out. Here is a little cheat sheet on the credit score general guidelines.

Now that you’ve read both arguments for and against, what is your opinion? Is the scoring system good or bad? Tell us by leaving a comment!

1 Testimony Before Subcommittee on Financial Institutions And Consumer Credit of the Committee on Financial Services.

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