Business
Modern businesses have the need to supply executives, managers, and employees with access to funds to make it easy to keep operations running smoothly. Business credit cards are useful to businesses, from small businesses to large corporations. Some of the benefits of using business credit cards are:
- Ability to track expenses
- Itemization of charges
- Credit agencies often offer bonuses, discounts, incentives, and perks
- Lower interest rates
- Establishes a business’ credit history
Just as an individual’s credit worthiness begins with establishing a credit history through applying for and repaying debt, a business is no different. Depending on the way your business is structured, you may find it hard to obtain loans, leases, materials, and vehicles without building up the credit of the business.
Rebuilding credit for a business can also be done through establishing a business line of credit or requesting a business credit card account. Businesses have the same opportunities as individuals with credit, if not more so. Many lenders are willing to extend credit to businesses because most of the business assets and purchases can be seen as collateral in the event the borrowing organization is unable to repay their debt or is liquidated.
Personal
If you have ever requested, applied, or been approved for credit, you have a credit file. In your credit file there are records of when you have paid on your debts, the locations you have lived (as reported by lending agencies), and other pertinent information related to you as a borrower. Personal credit and credit cards fall into one of three main categories: secured, unsecured, and credit cards.
- Secured loans and credit – This type of account is established on some type of backup funding or collateral. Credit agencies, banks, and lenders will allow a borrower to obtain a loan or credit based on the value of the collateral. The collateral can be anything from a cash deposit to physical assets like a home or vehicle.
- Unsecured loans and credit – With an unsecured line of credit or loan, are based on an individual’s credit history (credit worthiness) alone. A common version of unsecured credit is a signature loan. With a signature loan, the lender extends a loan with only the borrower’s signature. If you are deemed a credible borrower, this type of loan is based on trust.
- Credit cards – As Citi Group defines it, a credit card is “perhaps the most common type of personal credit. Unlike installment loans, credit cards allow repeated transactions up to a maximum credit limit, also known as your available credit limit.” Credit cards allow the card carrier to purchase items without immediately paying for them. The lender takes the responsibility of paying for the transaction. In exchange, the borrower pays back the lender according to the credit card agreement that may include interest, monthly maintenance fees, and other charges.
Students
Attending college or pursuing higher education is a great step in an individual’s career path and personal growth. Focusing on education is difficult enough; financial concerns shouldn’t be added to that. Students make up a large segment of new credit holders. Student educational loans come in a number of forms, for more information on these types of student loans, visit the official government website for educational loans, http://www.fafsa.ed.gov/.
Credit for students can be used to pay for the necessities that fall out the realm of education can be accomplished in a number of ways. Many students receive credit cards based on their parents credit history or even on the same credit card account as their parents. When parents support the students own credit card account, this is seen as co-signed or sponsored account. Having a co-signer is similar to having collateral; the co-signer will assume the responsibility of paying back the debt if the principle, in this case the student, fails to satisfy the debt(s).
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