Wal-Mart, GE launch Chinese credit card

Wal-Mart Stores Inc. and General Electric Co.’s finance arm are joining the race for a share of China’s growing consumer credit market by launching their own credit card this week, a Wal-Mart spokesman said Tuesday.

The card is to be formally launched on Friday but the companies began taking applications on Monday, said Jonathan Dong, a spokesman for Wal-Mart China. Wal-Mart’s partners are GE Money and China’s Shenzhen Development Bank Ltd.

The card will be part of the Visa network and can charge purchases in China’s currency, the yuan, or a foreign currency such as the U.S. dollar, Dong said.

“It can be used throughout the country as well as overseas,” Dong said.

Chinese and foreign banks and credit card companies are expanding in China in hopes of tapping its growing consumer market as Beijing eases restrictions on their operations.

Chinese banks that have taken on foreign banks as strategic investors have cited their expertise in issuing credit cards as a key reason for seeking them out as partners.

Wal-Mart’s new credit card is the second issued by the Bentonville, Arkansas-based company in China in as many months.

In September, the company issued a card with British-owned HSBC Corp. and China’s Bank of Communications Ltd., according to Dong. That card is part of the Mastercard network.

The cards, which bear the Wal-Mart logo, is meant both as a marketing tool for the company and a service to customers, Dong said.

“It gives us a great branding advantage. The card I carry has the Wal-Mart logo on it. People are surprised to see it,” he said by phone from the company’s China headquarters in the southern city of Shenzhen.

Wal-Mart has been expanding rapidly in China, where it opened its first outlet in 1996. The company now has 66 stores with 36,000 employees and news reports say it is bidding to buy a Taiwanese-owned chain of hypermarkets in a $1 billion (700 million euros) deal.

The credit card with GE will be issued in southern China, while the card with HSBC will be issued in the north, Dong said.

The strategy reflects the limitations of China’s developing banking and credit industries, where most companies lack a nationwide service network.

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How Credit Scores Affect Mortgage Applications

With a good credit score an applicant will receive prompt response from many lenders, all of them offering low interest rates and low down payment options. The loan amount offered also may be high. On the contrary a low credit score would result in a lot of rejection from various mortgage financers. Because creditors wouldn’t come forward easily to give credit to individuals that have a history of difficulty in repaying existing loans. After all, creditors take risk when they finance mortgages against the credit history of a debtor. Naturally, they will wish to remain on the safe side and pick up less risky ones that have good credit histories. A good credit score means less chance of missing on payments and therefore less risky.

But there are some real risk takers that will come forward to finance mortgages for individuals with bad credit scores. They would charge high down payments and always high interest rates though. They may also fix additional charges for every little paper work and may charge high closing rates. The loan amount offered will also be considerably less. The individual with poor credit scores will not have much choice but to accept the terms and conditions as there are no other alternatives. This is a tight situation and to avoid this you must have a good credit score.

People with bad credit may fall in to the trap of ’secured loans’. Secured loans are the ones where the loan applicant offers an asset as collateral security. The lender becomes secure about the repayment of the loan and not the borrower. Securing a loan with bad credit score becomes easy only when the applicant is willing to offer some asset as collateral security. This again is a very dangerous situation where an individual runs the risk of losing his entire collateral asset in case of failing to pay the loan installments in time. An individual should always avoid such type of a loan.

Resort properties normally require large amounts of finance which a person with bad credit may find it difficult to obtain. So it is always advisable to keep your credit score high. Incase the credit score becomes low due to unavoidable financial reasons it can be improved upon. There is no need to lose hope simply because a person has a low credit score. If the property that he intends to buy has good equity he should go out and try to obtain finances for it. There are many sub prime lenders willing to offer their services.

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