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Credit Cards for Bad Credit

Credit Cards For Bad Credit
Credit Cards For Bad Credit

With today’s economy and tight credit restrictions more and more people with bad credit score are finding it difficult to get approved for credit cards from traditional credit card issuers.

If you have a bad credit history there are a variety of financial institutions which specialize in providing credit for those with low credit scores.

Why You Should Consider Applying for Credit Cards if you have Bad Credit.

Used responsibly a credit card will help you repair your bad credit score. If you make small charges on the card and pay off the balance at the end of the month you will be on your way toward rebuilding your credit score. A credit score does not change overnight but timely, payments on all of your debts and maintaining account balances below 50% of the credit limits will, overtime, build your credit score.

What are the Terms for Credit Cards for Bad Credit Risks?

The annual fees and interest charged on unsecured credit cards issued to those with bad credit scores will generally be higher than with other credit cards. However, if you pay off your balances at the end of the month you will not incur the high interest charges.

Initially most unsecured credit cards for bad credit risks will have a low credit limit, however, if you make the required payments on time over a respectable period of time, and maintain a responsible credit limit to income ratio the financial institution will likely increase the credit limit.

What are the types of Credit Cards for Bad Credit Risks are Available?

Unsecured credit cards are the most common credit cards for bad credit risks. These cards have higher annual fees and higher interest rates based on your credit score and the extent of risk the financial institution determines that you pose.

Secured credit cards offer lower interest rates. To obtain secured credit cards for bad credit risks you will be required to make a deposit with the financial institution issuing the card. The deposit will be used to offset balances owed on the card if you default on the card payments. The deposit secures the financial institutions position and lowers the risk the financial institution is taking on by issuing the card. The deposit cannot be used in lieu of the regular monthly payment.

Discussion on Credit Cards
Discussion on Credit Cards
The advantages of secured credit cards are obvious – you can get a credit card even with a horrible credit history and the interest rate will not be exorbitant. You can use the secured credit card to begin to repair a bad credit score making it easier to obtain credit in the future. The disadvantage is that you have to come up with the deposit which if you are financially strapped may be a challenge.

A Credit Card with a Guarantor is another way to obtain a credit card for bad credit risks with a lower interest rate. The guarantor will have to be someone with a good credit rating and someone who is willing to assume responsibility for the balance on the card if you default on the payments. The guarantor should understand that if you default on the card the guarantor’s credit score would be negatively impacted as well as your own credit score.

Department store credit cards are often easier to obtain than generic credit cards that can be used anywhere. However, department store cards often have higher interest rates and can only be used at the stores operated by the business that offers the card. There may be some incentives on some store cards like discounts against future purchase so it is worth shopping around if you are considering a department store credit card.

Charge cards are not credit cards. With a charge card the entire balance has to be paid off at the end of the month the charges are made. Because you are not permitted to accumulate large balances on charge cards they may be easier to obtain than credit cards for those who have a bad credit history. Some financial institutions that offer charge cards also offer reward systems such as cash back or reward points which can be used to discount future purchases. Before applying for a charge card check with several charge card providers to determine which company offers the best terms for your particular situation.

Applying for Credit Cards for Bad Credit Risks on the Internet

There are many websites which offer credit card applications on the internet. There are also websites that provide information about the requirements to obtain credit cards and the terms offered by the various providers. The internet makes comparison shopping among credit card providers much easier. The providers which are most likely to approved credit card applications for those with bad credit will be identified.

Before making an online application for a credit card make sure the website hosting the application process is a legitimate site and has the highest level of internet security available including data encryption technology to protect your personal financial information. If you have any concerns do not provide your personal information through the site in question.

The extent of information required on an application is dependent upon your credit history. If you have no credit history or a bad credit history you will have provide more information than those with a good credit history. At a minimum you will be asked to provide your address, telephone number, email address and social security number. If you have no credit history or have bad credit, the application may also require a cosigner’s personal information.

To determine the terms of the credit card for which you are applying you will be asked to provide information like your monthly rent or mortgage payment, annual income, investment or bank account balances, outstanding balances owed on other credit cards and other outstanding debts. You must answer these questions honestly; the company can deny your application if they find that you provided false or incomplete information, or information doesn’t match your credit history.

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