In lieu of a simple chart of accounts for selling general and administration expenses, design a numbering system with more information and structure. A consumer’s credit line is determined by the business extending the credit account. Most creditors will perform credit checks to determine if the customer is credit worthy. This will aid the creditor in determining credit limits and rates. Most credit lines require repayment on outstanding debts within 30 days. Remaining debt balances on an account credit may be subject to penalties and fees outlined in creditor account disclosures.
Credit Card Credit Line
A credit card credit line is a secured line of credit that limits the amount a borrower is allowed to charge on a credit card account. Lenders requires a credit account application form to issue lines of credit. The credit account application form will authorize the lender to view your credit report and determine if the borrower has an acceptable credit score. Once consumer uses a credit line, a consumer promises to repay the financial institution for the account credit balance at an interest rate for the length of time an open balance is on a credit card account. There is a required monthly payment based on the account credit balance for the life of the account or until the credit account is paid off. Financial institutions will impose late fees and penalties for failure to pay the minimum amount due each month.
A lender may perform a credit history check for determining whether they will extend a credit card credit line. For individuals hoping to build their credit history, there are good credit cards for no credit history. Good credit cards can have a positive or negative effect on your credit history report. But this all depends on factors such as the amount of new credit, past payment history, and the overall account credit balance.
Credit Cards & Minors
Due to laws protecting children from entering legal contracts, most institutions set credit card age limits on credit accounts. Some creditors may not have minimum age limits for secondary card holders; however, there are credit card companies who allow pre-paid accounts for minors. Pre-paid accounts have a specific credit card credit lines for minors to use. Parents commonly use this method as a way of teaching their children financial discipline.
Business Charge Account
A business charge account is an unsecured line of credit that a borrower has directly with a vendor to purchase goods or services. A borrower may be required to complete a business credit account application form for the creditor to determine the amount of the credit line. Generally, only authorized personnel are the only individuals allowed to execute a business credit account application form.
Once a business credit account application is approved, a borrower will receive a credit account application letter outlining the terms and conditions of the business charge account. The payback policy on a business charge account is generally the promise to pay back the account credit balance each month. Interest fees and penalties may be accessed if the account credit is not paid in full each month.
A charge off is a bad debt that will give you a derogatory mark on your credit report. A credit account charge off is one of the worst marks that you can receive on your credit report. Failure to repay an account credit can result in a credit account charged off. If you declare bankruptcy or fail to make payments for 6 consecutive months, lenders will sell bad debts to third parties, usually collection agencies, to credit accounting and zero out assets on financial ledgers. When a credit account charged off, it will last on your credit history for 7 years. A charged off account does not release you from any financial obligations. You are still required to repay the creditor or collection agency.
When paying a charged off account, negotiate to have the charge off on credit report listing to paid as agreed. Bad debt collection practices will involve aggressive strategies by collection agencies in order to collect bad debt. This is primarily due to the fact that agencies keep the collected money. You should not make payments on verbal agreements or disclose your checking account details when dealing with collection agencies. Also, do not agree to pay back schedules you can not commit to. This will have more of a negative impact then the charge off.