Understanding the new credit card rules
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3 questions about credit card reform

If you are 30 days late on your payment, the rate on your balance won't increase, but you may face a late fee and a strike on your credit report in the form of a notation indicating delinquency. The reporting of a single 30-day missed payment can cause a high credit score to plummet.

Now, what your credit card issuer can do instead is raise your interest rate on new purchases. The issuer needs only to provide 45 days' advance notice of the increase. Make sure to open your mail promptly to stay informed of any changes to your account.

Can I get credit under 21?

QuestionAs an 18-year-old, I can't get a credit card until I'm 21 under the new Credit CARD Act. Are there options for me to build my credit score now? Can I get a secured card without a co-signer?

AnswerThe CARD Act does make it harder to build credit when you're between the ages of 18 and 21. It requires an underage applicant to have an "independent means of repaying any obligations," or the signature of a co-signer who is at least 21 years old and has the ability to repay any debt.

You may be able to get a secured card under 21, but the requirements of the CARD Act still apply.

At Bank of America, for example, you might be able to qualify for one without a co-signer. Spokeswoman Betty Riess wrote in an email: "We do offer a secured card and the same rules apply to young adults under 21 that we have on the unsecured card. If the adult applicant meets the ability-to-pay criteria, they will not require a co-signer. If the applicant does not meet that criteria, we would require a co-signer."

In January 2010, the Federal Reserve Board issued a rule with more specific guidelines on this topic. Issuers must review the consumer's income or assets and current debt obligations using "information" from the person's credit report. The issuer must consider the ratio of debt obligations to assets, the debt-to-income ratio or the income the consumer would have after paying the debts. Issuers can estimate income or assets using "statistically sound" models.

You could also build credit by becoming an authorized user on a parent's existing account. There are pros and cons to this strategy, though. Late payments on the account will affect your personal score and your parent's. A high balance-to-limit ratio could also hurt both scores.

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Editorial Disclaimer: The editorial content is not provided or commissioned by the credit card issuers. Opinions expressed here are author’s alone, not those of the credit card issuers, and have not been reviewed, approved or otherwise endorsed by the credit card issuers.

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