Credit cards for bad credit – Choose your option wisely
Bad Credit
FICO Scores ranging from 300 to 579 are considered as very poor credit rating. Applicants with such FICO Score generally need to pay an additional fee or even a deposit. The applicants can get into trouble getting approval from credit card issuers as this score range is the lowest on rating scale.
credit cards for bad credit
How to work on bad credit
It is very much necessary to know the factors that help you get your credit to where you want it to be and it can be done by checking the FICO Score and factors are positively and negatively impacting your credit. Paying all your bills on time and keeping your balances low will generally help you on the road to good credit. You can use the payment reminders offered by some of the banks by using their online portals that will send you an email or text message reminding about the next payment which is due. Paying bills for a long time will definitely help your FICO score to rise. If it is becoming difficult to make ends meet then you should seek assistance from a credit counseling service and also it will not hurt your FICO score. Don’t open lots of new accounts too rapidly because they will lower your average account percentage which will have a greater impact on the score. If you want to improve your credit score then you must show the creditors that you got what it takes to build a good score and for this managing your balance is a very important paying bill on time each month. Maintaining payment history is most important factor in your FICO credit score.
Secured and unsecured credit cards
Secured and unsecured these are two types of credit card options for bad credit. The secured credit card requires certain amount of balance in the account to be deposited in the savings account which has a credit limit depending upon the deposited amount. The deposit will act as collateral for a secured credit card whose funds are not used for regular payments. This is not like the prepaid cards which draws from the funds deposited and is not reported to credit bureaus. Unsecured credit cards do not require any kind of deposit of money and is simply a revolving line of credit that you can borrow against and these are the most used cards.
Credit card details to look for with bad credit
Building credits can become easy with the help of secured credit cards but only if the issuer reports the credit history to the credit bureaus. A minimum security deposit is demanded by the issuer, and some will hold the deposit in an interest bearing account, such as a CD. It is not mandatory to have any credit history or have a minimum credit score for approval and the credit providers may not require these.
Charging of fees regarding issue of a secured or an unsecured credit card depends upon the issuer as he might even charge an annual fees or monthly service fees or charge nothing. You can understand your total cost by understanding and paying total attention to all of the different fees. There might be some additional things to look for including any program or maintenance fees, application fees, transaction fees, and penalty fees or also fees for optional services, such as fees for lost cards or credit line increases.
Interest rates are variable and varying significantly and can also be fixed. Avoiding interests can be done by paying full balance each month and it will help maximize rewards if those are offered. The interest rate can increase if you fail miss any payments some of the issuers does this but some might just offer no penalty.
When you will start searching for credit cards for bad credit you may get tempted to get as many as possible in hopes of getting approved. Do not encourage such desperateness because each time you will apply for the card a hard inquiry is put on your credit report and this inquiry is going to impact your credit score negatively for as long as 12 months. You a per-qualification option first before applying for several different card, or only apply for cards you are confident you’ll be approved for.
