Tuesday, May 23, 2017

Build Card: A Credit Card to Repair Or Build Your FICO Score

Are you someone who would be considered a subprime borrower?  You get this status by having either ruined your credit or having no, to very little, credit history.  A credit score of 660 or below makes you a "subprime" borrower.  As a subprime borrower, you've struggled no doubt to get a company to give you a credit card.  The recommendation for you to rebuild (or build) your credit has been getting what's called a "secured" credit card where you deposit the funds you intend to use ahead of time.  The drawbacks to this type of credit card are:

1.  Having to pay a security deposit
2.  Associated fees: application, processing, and annual.
3.  Higher interest rates than those offered to credit worthy borrowers.

This may be a good option for you if you're young, have fewer responsibilities that could transform into financial emergencies, and have never experienced using credit appropriately.  But what if you're a grown up with adult things happening, and maybe you had a great credit history before a financial event (losing a job, losing your insurance, a bankruptcy, etc.) led you down the path of abusing your credit card to get by?  A secured credit card may not be your best option to rebuild your credit.  Neither is using a Payday lender.
Image result for The Build Credit card

Have you had to use a Payday lender because you couldn't access a small loan with your history?  This is an expensive solution, as you already know.  Being charged 400% interest on balances will keep you in the poor house and never give you a chance to come up.  So...the good news.  Now you may qualify to get a more traditional credit card, one that is unsecured and equally transparent with its terms.  I was reading BusinessInsider yesterday and came across this article about a company targeting "deep subprime borrowers" (scores between 550 and 600) as potential candidates for a credit card that builds broken credit history, and helps people avoid local Payday lender shops.

Fscardinc.com is a company founded by CEO, Marla Blow.  Its lone product as of now is the The Build Card, a regular looking credit card with a MasterCard logo (meaning no one will know your credit is on probation, so to speak).  Here are the advantages of using a credit card like this:

1.  Transparency (no hidden costs)
2.  Lower interest rates (a lot lower than Payday lenders)--percentage in the high 20s.
3.  Instant access (no deposit needed)
4.  Longer repayment period

The disadvantages are:

1.  Still a low borrowing limit (starts at $500 and grows over time as you demonstrate responsibility)
2.  There's an annual fee of $75.
3.  It's not for everyone.  The company gets to decide whether or not you are worthy.  After all, you're a risky bunch of borrowers.
Image result for We're not worthy!

My take is that it's great that subprime borrowers have another option to Payday loans and secured credit cards.  If I wanted to repair my credit, this is how I would go about it.  Alright so there you have it.  Before I leave I want to add that I am not being paid to review the Build Card, and am not in any relationship with the company.  (Though I wish I were!)

Thanks for reading.  Until next time.

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