Credit Cards And Bad Credit Mobile Phones: What you need to know
Getting a phone contract is an excellent way to enjoy the latest smartphones. However, bad credit has been a major stumbling block that makes many people unable to access the phones of choice. What causes bad credit score?
About 30% of your credit score comes from what you owe other entities such as financial institutions, mortgage firms, and insurance. However, credit card debts stand out significantly because of their high-interest rates that can keep sinking you into bigger debts and pulling down the credit score. Many people express their difficulties of addressing the credit cards issue because of its complexity and long-term implications. It is, therefore, very crucial to understand more about credit cards before taking an action.
To get the bad credit mobile phones, lower the mobile phone companies’ risk
- Using a SIM only contract to give phone companies ample time to evaluate your credit worthiness.
- Raising some upfront to demonstrate your commitment to payment and keeping the overall debt as low as possible.
- Selecting a low-cost smartphone that you can easily pay within a shorter period.
As you work on raising your credit rating, here is everything you need to know about credit cards.
Cancelling credit cards do not change your score immediately
Even though credit cards have very high interest rates, cancelling them does not have immediate benefits. Well, your history for your credit card will remain ingrained for years. That is a fact, you cannot change history. In fact, it would even eliminate positive things in its history that were contributing towards raising your credit score.
You can use the credit cards to your advantage
Though your credit card has contributed to the current poor credit score, you can use it to your advantage. Once you have cleared the debt, avoid overspending above personal proscribed limits. For example, you can put a personal limit of $100 and stick to the limit. With time, this will be captured together with other financial information to raise your credit score.
Avoid harming your score by closing the credit cards
Every time that you apply for a loan or phone credit with financial institutions, the lender checks at the ratio of balance on revolving accounts to total available credit. If you have outstanding credit, keep it lower than 30% to the available credit. If you close some credit card lines, the fact is that they will not be factored into the ratio, and chances of getting a loan will be low. Because every entry is factored in the credit report, the credit score will go down.
Follow the right method to close a card
If you have a lot of credit cards, it is advisable to close some that worked against you and retain those that have very good reports. Even if you stop using the card, there is a risk of the number falling into the hands of cyber criminals and causing you a lot of damage. To terminate the card, call the company’s customer care and have the card terminated at your request.
Credit card debts are major causes of poor credit score because their debts attract very high-interest rates over time. This makes it very difficult to get a mobile phone contract because of the poor score. To address the problem, it is advisable to avoid closing the credit cards immediately, but using them to your advantage.