The Best Cards For Bad Credit
Having bad credit can seem scary, but the reality is you can rebuild good credit given time and care. The credit card industry is competitive and companies will vie for your business, so don’t feel you are sunk for good. The hardest part in fact may be ensuring you remember to make the payment on time!
Regular Cards Are Still An Option
The first thing to consider is that you may still be able to qualify for a regular card. Each lender has their own guidelines for granting credit, and if you already have a relationship with your bank you may wish to go in and speak with an advisor. Not only can they help clarify whether they have credit card options for you, they can help you ensure you do everything possible to build up good credit again.
Even if your current bank is not up to it, other banks may be. Don’t be afraid to look for a good card even with bad credit. If you can prove you have regular income, perhaps by using your pay stubs, you can often qualify. Stick with a credit card name you recognize such as MasterCard or Visa to ensure your card will work wherever you need it to.
While rebuilding credit being eligible to receive a card is not your only concern. You will want a credit card company that reports to the major credit reporting bureaus; Experian, Equifax, and TransUnion. There are other credit reporting bureaus, although these three are most commonly used. If you do plan to work towards a loan or mortgage loan once you have rebuilt your credit, it can be worth your while to ask the lender what bureaus they collect information from.
Another thing to look for is credit cards with a credit limit that increases periodically. Although you may be required to start off with a limit of only a few hundred dollars to be approved, given responsible use of the card, you may qualify for credit limits that automatically increase over several months. This allows you to gradually increase your credit account as you maintain good habits, so you can reap the rewards of being a responsible borrower over time. Eventually the credit card you obtained to rebuild credit can be a handy tool even when your credit is good again.
Secured Cards May Be Your Answer
Secured cards are available for those who have trouble gaining a regular card, and allow you to pay a deposit to use the card. Although interest rates may be higher or application fees and annual fees may apply, these are naturally easier to get. Your credit limit will often be equivalent to your deposit at first, and you may be required to start with a minimum amount of about $300-$500. Secured cards may also have increasing credit limits over time, and pay interest on the deposit.
Typically the deposit will not be leveraged unless your account is many months past due. One late payment will not mean you lose your deposit. However, interest will continue to accrue, and if you simply avoid your secured card, you could end up out the deposit and a lot more in interest in fees. Ultimately you’d end up both out your deposit but adding yet another black mark on your credit history. Therefore you need to ensure you manage a secured card just like any other. That said, these offer an easy option to open a credit account so you can re-establish good habits and build credit from the ground up.
You May Qualify For Rewards Points And Other Goodies
Store cards may be obtained at many popular chains including department stores. These usually have a higher interest rate than regular cards, so it is important to use them carefully. Once again, you will want to use them for smaller purchases when you can pay the balance in full very quickly to avoid paying lots of interest. These cards may also allow you to collect reward points toward future purchases or give you access to pre-sale information, free catalogues, and deep discounts. If you shop regularly at a particular store you may find a store card not only allows you to rebuild credit but offers these extra goodies as well.
Discounts And Rebates When You Fill Up The Tank
Finally, gas cards may be available at your favorite station. Although they may be restricted to being used in the gas station and store, they offer a chance to start a new credit account. The interest rates here can be high, so watch that balance. Again however you might qualify for special discounts or rebates by using a gas card, so consider this option for rewards to help motivate you to use that credit wisely.
In A Nutshell
The important thing is to be honest about your situation and ready to rectify it through responsible credit card use. Rebuilding credit is never instant and you need to buckle down to make it happen. Still there are many options available and you should not be discouraged by past history. As always, you can find the right card and make regular payments to make credit work for you. If necessary put a reminder on your calendar or set up automatic bill payments to ensure you never miss a payment again, and you too will end up with good credit.
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