Banks Want to Keep Their Clients

by John_S on September 29, 2014

Many financial institutions are willing to offer a lower interest rate to borrowers who offer collateral. Borrowers find their monthly payments more manageable, and it is easier for them to budget. Making payments on time helps rebuild credit.

Another way to build or rebuild credit is to use a secured or prepaid credit card. Secured credit cards are offered by mainstream banks, many credit unions, credit card companies, and other financial institutions. 

Still, this is a good option to build or rebuild credit. People who have gone through some major event such as loss of job, prolonged illness, or divorce usually apply for a secured credit card. To this, borrowers are advised to make sure the card issuer reports to all credit reporting agencies. If they do not report, the borrower has lost a key benefit. As a rule, if you start getting offers for unsecured credit cards after having made on-time payments for several months, you will know that the card issuer is reporting. Make sure the credit card issuer does not flag the report as secured or prepaid credit card because you will find it difficult to rebuild credit this way. How long does it take before borrowers are offered an unsecured credit card? Credit card companies and banks want to keep their clients, which is why they will offer you an unsecured credit card provided that you make regular payments. In most cases, it takes one year to improve your credit score, and you are eligible to apply for an unsecured credit card. Secured credit cards and secured loans are a good choice for borrowers with poor credit. Borrowers with poor credit have a better chance of getting approved for a secured loan if they offer collateral to the lender. Thus, financial institutions take less risk. People who apply for a secured credit card deposit money with the credit card company.

Borrowers who seek to rebuild credit are advised to consider both options – instalment loans and revolving credit. At the same time, borrowers with credit problems and histories of late or missed payments are viewed as high risk. They are either turned down by mainstream lenders or are offered unfavourable terms and hefty interest rates.

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