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Understand How Credit, Unsecured Accounts & Open-end Accounts Work in the US

"Open-end accounts can be potent tools to improve your finances – and we are about to explain why and how", stated Paul J Paquin from Golden Financial Services

Open-end accounts include credit cards. You can keep a credit card open for eternity if you choose to. Open-end accounts are considered unsecured accounts. If you let debt accumulate on a credit card it becomes an unsecured account.


Most consumers associate unsecured credit cards as nothing more than debt, but it doesn't have to be that way. In fact, credit cards can bring great happiness to a person’s life.


Golden Financial Services, a credit card debt relief company, is about to teach you the most important things you need to know about open-end accounts, credit cards, and unsecured account.


Let’s start with the basics.


What is an Unsecured Account?


An "unsecured account" doesn't have collateral attached to it, like an open-end account (AKA: credit cards).


The information on your credit report; such as your credit history and FICO score, eligible determine if you're eligible for "unsecured credit."


If you have a high FICO score creditors are likely to issue you an unsecured loan.


If you have a low FICO score with derogatory information on your credit report such as late or collection marks, to get approved for a credit card or loan, creditors may require collateral such as your car or home to be part of the agreement.


If you don’t make your monthly payment on a secured debt, the creditor can legally take whatever asset you put up as collateral.


If you have an unsecured loan and stop making your monthly payments on it, the creditor cannot take any of your assets, including your home or vehicle, so your property is protected; — unless they first bring you to court, sue you, and win (winning is getting a default judgment).


An exception to this rule is with a federal student loan.


With Federal Student Loans (Wages Can Be Garnished)


Federal student loans are unsecured accounts. However; if you fall behind on your federal student loan payments, the Department of Education can garnish up to 15% of your disposable income — without having to take you to court.


You can call this "excessive use of government power.” Shame on the government for taking advantage of their power!


Fortunately, for students who fell behind on their student loan payments — outstanding income-based student loan relief options are available in 2017.


Here is information on private student loan relief options and here is how to get assistance with federal student loans.


Need Student Loan Forgiveness? (See Step-by-Step Instructions)


An unsecured account can be your — worst enemy or best friend.


The great news is…you get to pick – shall I make unsecured account my friend or enemy?


Your social security number connects you to an "unsecured account," much like a pair of "invisible handcuffs" — making sure you don't get away unpunished. Your credit will take a beating if you fail to pay your monthly bills on time.


On the other side of the coin; your social security number can act as your "bodyguard," making sure you get paid for great work – meaning, your FICO score goes up with great payment history!


Unsecured account Examples

  • credit cards
  • private and federal student loans
  • unsecured bank loans
  • medical bills
  • a repossessed car; after it gets sold at the auction — that remaining balance is an unsecured account
  • cell-phone bill that went to collection
  • utility bills that went to collection


What is an Unsecured Credit Card Debt?


To comprehend what an unsecured credit card is, let's first talk about a secured credit card.


When a person gets their first credit card, often they start with a secured credit card because it's easier to get approved for, since you are putting up collateral. Unless you use "The Piggyback Trick to Hack a High FICO score in Under a Year," which I wrote about here


Your first credit card will be a secured credit card, where the bank guarantees the card with cash.


So, if you get a secured credit card with a $500 credit limit — you must give the bank $500 to guarantee that your credit card bill will get paid.


Therefore; when you get an unsecured credit card, you are not required to put up collateral or even show that you have the funds in your checking or savings account.


You get the unsecured credit card by signing a piece of paper. Keep in mind; that piece of paper includes your social security number and signature agreeing to specific terms.


Rick Sorrentino, a Credit Expert and Senior Account Executive at Golden Financial Services says it best;


“If you aren't using credit to make money, you are using it wrong & should call it exactly what it is…debt! Creditors won’t call it a "debt" card or state what your "debt limit" is because psychologically "credit" sounds so much better, but the fact is, when you're dealing with the effects, you know you're dealing with DEBT!




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