The Household Bank Premium MasterCard is offering an excellent opportunity for people with a “fair” credit rating (which is the majority of Americans) a chance to improve their score. While most credit card companies are aggressively slashing lines of credit, this card has shown a willingness to take a gamble with less than exemplary financial citizens.
There is no official number for a “fair” credit score, but most agree that any range between 640 and 680 could be considered fair. Such a rating indicates either some delinquent bills, a history of failing to pay credit balances, or a poor debt-to-income ratio.
It is often harder for them to get access to loans at good rates. The Household Bank Premium MasterCard gives members an introductory rate of 0% annual percentage rate (APR) on purchases for the first nine months.
If you have applied for and received this card you can use it toimprove your credit score only if you stick closely to a strict plan. First of all, do NOT try to use the card to consolidate what you owe. Your debt will just become greater and more expensive to pay back.
That 0% APR doesn’t apply to balance transfers. A balance transfer fee of 5% ($10 minimum) will be charged. And you will wind up paying a variable 19.9% APR on this debt from the get go.
Do not use any checks that might be mailed to you as a member. Writing a credit card check is considered a cash advance and you will be charged a variable cash APR of 20.9%.
Secondly, do not regard this card as a bottomless well of credit to be used until it is maxed out, too. If your intention is to improve your credit rating, it must be used only for that purpose.
Here’s how to do that. Buy one small practical item that you were going to buy anyway, that costs one hundred dollars or less. Since the card is accepted at millions of locations worldwide, why not use it at your grocery store to get this week’s meals.
Plan to pay for the item as quickly as possible. Do not buy anything else until that transaction is paid for. Repeat this process until your nine months of zero APR are up. Do not use this card again.
Ignore the 1% cash back offer. It only pays out when you reach a level of $25. Since your plan is to make a series of small, easily repayable purchases, you should never put the $2,500 amount on this card that you would have to, to get that twenty- five dollars. Don’t let anything distract you from your goal of raising your credit score.
All the time you have been making these small purchases, the bank has been reporting to the three major credit bureaus, TransUnion, Experian, and Equifax. Hopefully the report each month is that you have paid more than the minimum and paid on time. The bank will even send you emails or text messages to remind you of your upcoming payment due date.
All through this process, keep in mind that your ONLY goal has been to raise your credit score. If you put more on credit than you can pay back, the service on your debt will zoom from a 0% APR to the penalty APR of 29.49% if you fail to make a minimum payment by the due date. Even worse, your credit score will fall leaving you even further from your goal.
Using The Household Bank Premium MasterCard may not be the magic bullet that gets you out of the “fair” category, but it might be, especially if you were in the high part of the fair range to begin with. You can now use your higher credit score to negotiate loans at better rates. Remember, always to keep your borrowing down to a level that you can repay.