Credit Ratings Overview

What is a credit card facility?

A credit card facility is a special credit facility which allows an individual (or a business) to pay in credit for goods or services. The issuer of a credit card pays a merchant, based on the promise made by a cardholder to repay the amount (and other charges agreed upon).

Most banks offer a credit card facility to their customers. Banks create a revolving account to grant a certain line of credit to the cardholder. The cardholder can borrow money up to a certain amount from the credit card to pay merchants or as cash advances.

Credit cards offer customers a continuing debt balance (with interest charges on late payments). After all balance payments are made, a cardholder regains access to the full line of credit.

How to get a credit card facility

It is incredibly easy to avail a credit card facility in the US as most banks are more than willing to hand out credit cards to customers. This is because banks charge a much higher interest rate on credit cards as opposed to loans and other types of credit facilities.

However, customers must be eligible for obtaining a credit card facility. The eligibility criteria for handing out a credit card differs from one bank to another. Nevertheless, most banks will hand out credit cards to customers if some type of collateral (term deposits, real estate, etc.) is provided by the applicant.

Setting up a credit card facility

Setting up a credit card facility is a fairly straightforward process. All that needs to be done is to contact a bank that offers a credit card. The bank will ask for personal details and evaluate the creditworthiness of the applicant. If the applicant satisfies all eligibility criteria, then the card will be issued in no time.

The only thing that applicants need to do is to understand the terms and conditions associated with different types of credit cards. Business credit cards, secured credit cards, prepaid cards and digital cards are the different types of credit cards applicants can choose from.

Credit card facility for small businesses

Apart from individuals, small businesses can also avail the benefits of a credit card. Such credit cards are issued as business credit cards in the name of a registered business. However, business credit cards can only be used to make payments related to business purposes. As opposed to normal credit cards, business credit cards offer special benefits to a business. These benefits may include rewards on shipping, business technology, travel, office supplies and the like.

Most major credit card issuers such as Visa, MasterCard and American Express offer business credit cards. However, these cards are issued based on the personal credit score of an applicant. If an applicant is unsure of his/her credit score, then income from various sources can be used to qualify for a business credit card. Thanks to this facility, even small businesses and newly established businesses can make use of a business credit card facility. “