gorgak
Head-Fier
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- Jul 8, 2008
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Quote:
Visa/Mastercard is just the company that processes the transaction, they have nothing to do with the credit.
If you have a visa card for a bank account, there is no credit involved because it is your money in the account. So when you use that bank card you are using money you already have.
With a credit card, you are temporarily borrowing money from the lender. When you use a credit card you are spending money that you don't have. The lender lets you borrow the money for some interest in return. When the lender gets the money and interest back from you they do you another service by reporting it to credit reporting agencies.
So by using a lender to borrow and pay back money, they go to the credit agency and say "hey, it's okay to lend this guy money, he's good for it."
Other lenders will see that, and be more willing to lend you money at greater amounts and at lower interest rates for houses, cars, etc.
| Originally Posted by Joeshmo39 /img/forum/go_quote.gif What do you mean the card attached to your bank account? I was under the impression that was useless when trying to build credit and you had to have a normal credit card you paid every month with an APR etc etc to build your credit. I have a debit/ATM/mastercard from the bank, is that any good? I asked the banker and she said it was not, that I needed to get a real credit card. |
Visa/Mastercard is just the company that processes the transaction, they have nothing to do with the credit.
If you have a visa card for a bank account, there is no credit involved because it is your money in the account. So when you use that bank card you are using money you already have.
With a credit card, you are temporarily borrowing money from the lender. When you use a credit card you are spending money that you don't have. The lender lets you borrow the money for some interest in return. When the lender gets the money and interest back from you they do you another service by reporting it to credit reporting agencies.
So by using a lender to borrow and pay back money, they go to the credit agency and say "hey, it's okay to lend this guy money, he's good for it."
Other lenders will see that, and be more willing to lend you money at greater amounts and at lower interest rates for houses, cars, etc.
