Sub-prime merchandise cards are a cost-effective and powerful tool to increase your credit limit and decrease your debt-to-credit ratio. Like the “traditional" credit cards, these versatile cards report to one or more of the major credit bureaus each month.
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A sub-prime merchandise card account is simply a line of credit that allows you to buy merchandise from a specific vendor, usually the company that sold you the card. In most cases, you"ll purchase the merchandise through a catalog or online mall.
Virtually anyone can be approved for $5,000 to $10,000 in credit attached to a sub-prime card with NO credit check and NO cosigner. The difference between a sub-prime account and a typical credit account is that the card is good only for merchandise through the issuing company’s website or catalogs, and the consumer is required to pay a small deposit on whatever they purchase. After the deposit is paid, the remaining balance is financed on the card.
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There are some definite and immediate advantages to getting a sub-prime merchandise card.
1. Your current high credit limit on your credit report will instantly be increased by the amount on the card and it appears on your report exactly like any other credit card or unsecured revolving account.
2. Your debt to credit ratio will immediately improve because your credit limit has been increased.
3. You will always be carrying a small balance of which you will be making regular payments. This quickly establishes your credit-worthiness.
4. If you make your regular payments it will not be long until you have legitimate, pre-approved credit offers coming right to you.
Look for a sub-prime merchandise card that reports to the credit bureaus and that offers a zero-percent interest rate.
A much better approach may be to obtain a secured credit card, which will be accepted with any vendor, and still help establish and rebuild your credit.