Tips In Choosing The Best Bad Credit Card
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Having bad credit does not mean one can never apply for good credit cards. Because of so many people having problem with their credit, credit card companies saw the potential in providing service for this people. Thus, credit card companies came up with bad credit credit cards. As the name suggest, these credit cards are especially created to cater people with less than perfect credit history.
Bad credit credit cards or secured credit cards do come with higher interest rates and fees to make up for the risk from customers who have a poor credit history. When compared with standard credit cards, these cards also impose lower credit limit for its card holders since they were not able to present impressive credit.
However, this doesn’t mean that credit cards are inferior since these cards can be a tool for people with bad credit to regain their credit reputation. Just how is this possible? By submitting regular payments on your account, secured credit cards report to the major credit bureaus to ensure that your credit report is updated.
Understandably, not all bad credit cards are offered in the market are great and it is up to you to do your choosing carefully. One of the first things you should look for with a credit card is whether it reports to the major credit bureaus. There are some secured credit card providers that do not have this important provision. This is crucial in helping you rebuild your bad credit history.
Of course, just because you don’t have an excellent credit doesn’t mean you have to settle for unreasonably high rates that credit cards impose on their clients. It is possible to find secured credit cards with interest and fees that do not take advantage of your poor credit.
Another important factor to check about secured credit cards is the minimum amount of deposit required to get an approval. This security deposit is held in your account in case you default on your debts, thus giving the bank a guarantee that they can use this money to pay for the debts your defaulted. Take note also that some banks place this security deposit in an account that bears interest. Make sure that you’ll be able to claim this security deposit along with its interest after building your credit.
The use of your security deposit may also differ depending on your bank. Some creditors will take your deposit if you miss a single payment in your account while some banks allow at least 5 to 6 months before deciding that the card holder has completely defaulted his debts.
Most importantly, choose a secured credit card that allows you to convert your account to an unsecured one after a certain period if you can prove that you are submitting all your payments dutifully and timely. This way, you can enjoy the privileges that unsecured credit card holders enjoy such as lower APR, higher credit limit, and less restrictions.
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18 Comments
October 9th, 2009 at 5:20 am
Major credit card issuers like Discover, American Express and Chase offer a credit card for bad credit holders. A 'shopping' card offers you an unsecured line of credit from specific sellers. Use these cards to increase your credit rating, since the credit bureaus will be informed about your timely payments.
Take care to ensure your credit is good by making intelligent credit choices. Keep low balances, do not be extravagant and take care to pay off your balances promptly every month.
http://debt-trap.com/category/Bad-Credit-Credit-Cards.html
October 9th, 2009 at 5:36 am
Its still a good idea to at least have a credit card; provided that you use it responsibly and pay your bills on time.
October 9th, 2009 at 5:43 am
Each card you apply for lowers the score 7-11 points. Have 3, THREE, good trade accounts, never run them to the limits but keep the balance below 30% of the available credit on all of them, and pay them off when the bill comes in.
That builds your credit.
Inquiries by credit card companies stays on your record for TWO years, the credit history stays MANY years if it is good and 7.5 if it is bad.
You do not need 20 or 30 charge accounts, each has a limit on it and potential from a creditors point of view that could at any given time be your total debt if you ran them all up.
October 9th, 2009 at 6:00 am
credit is for poor people.
October 9th, 2009 at 6:31 am
Creditors can either enlist collection agencies to recover debt on their behalf, or they can sell your debt to the collection agency. If it is the latter, then the account is closed. If it is the former, the account is probably "active", but there may be a block on it. For example, when I worked in the library, we used an outside collection agency to collect on library fines over $50. The library card is blocked. Only until they pay off their balance will we allow them to use the card again. (The books are assets of the City….a library card is like a credit card in which you're borrowing property.)
Your credit report will show that your collection accounts have been closed. They'll still show up on your credit report, so your credit will be ruined until you are able to repair it (through time and more responsible care of your credit).
Even if your accounts are still active, you will be paying high interest rates because you defaulted, which allows them to charge the regular rate. You might want to start anew, so that you have a better interest rate and your limit will be much lower, allowing you to maintain control of your credit.
October 9th, 2009 at 10:26 am
That is criminal. I lose respect for anyone that works at a credit card company.
October 9th, 2009 at 4:07 pm
$20k is not that high for a combined total in credit limits – unless you only make $5k a year.
As long as a person takes care of their credit, having limits that meets yearly income or even exceeds yearly income could gain that person not only high scores but also creditors offering products with excellent terms attached.
Again, as long as a person is taking care of their cards by keeping utilization down, paying on time (preferable in full), never going overlimit, etc. (which is what you say you are doing)
The "only" time you should really carry a balance and make payments on a credit/charge card is when you have a 0% interest promo for x number of months.
Since you state that you have no problem controlling your spending and you pay in full every month, you are proving to all creditors (current and future) that you are a good risk.
I wouldn't recommend cancelling the cards that the promo's have expired.
You might keep the cards locked up and pull them out every once in a while, make a small purchase then pay when you get the statement. Allow them to continue to raise your scores.
It sounds like you should have a decent credit history, by what you have posted. So closing the occasional card should not have a major impact on your scores
But opening cards for the promos, then closing them after the promo's expire will show an unstable credit history and will eventually send red flags to any future creditors. You will probably find it harder and harder to be approved even if your scores are high.
October 9th, 2009 at 10:26 pm
What about cards for people with an 800+ credit score?
Three things such people, who are just 13% of the population, want in a card:
1. Convenience. We use a card because it's easier than cash. Don't bother with a card that doesn't have a completely automated pay system. If the card only allows you to schedule a payment online manually, apply for a different card. You want a card that allows you to sign up once and have all future payments automated without your having to intervene manually.
Look for ease of tax accounting and business expense accounting. Find one that gives a periodic summary by purchase category and/or vendor, so that it's easy to use during tax or expense reimbursement time. Business cards are better at this than personal cards.
2. Protection. When inadequate service or defective product is purchased, it's easier to reverse payment from a credit card than from a debit card or other payment vehicle. You're also limited in the amount of theft or fraud that can be charged up.
3. Rewards: The best rewards for you are those that reward you for routine, necessary behavior. For many, that's for gasoline, grocery and utilities purchases. For others, it's travel purchases. The cost is that you have to pick the right specialty rewards card out of your wallet, or sign up the utility to be paid by credit card.
These incentives come at a risk: loss of privacy, and outright identity theft. Read your cards' Privacy Notices and act. Read your credit reports regularly. Each of the three major Credit Reporting Agencies (CRAs) offers you one free report per year. Savvy credit users will space out their requests: every 4 months, ask for a free credit report from a different CRA.
Why aren't they advertised?
Point 1: The most money is made off people who are lazy, complacent, ignorant or addicted. Thus, there is little incentive for credit card companies to advertise competitive products and services that reduce their revenue streams. Credit cards are demand inelastic: people will keep using them even as rates rise steeply. That is, it's tough to break a dependency on them. Why advertise much for something people already want?
Point 2: The treasures await you, but you MUST take action to get them. The users who are complainers or are assertive dealers get the very best deals: they've made the efforts that produce the best results. They use the phone to play off one card company against others until one of the companies budges. Because I never pay finance charges, I had to learn and practice this behavior before I could train others to do it. The companies have regular customer service reps as well as Customer Retention Departments, backup departments hired to keep you happy and loyal.
Point 3: If you've opted out of prescreened credit card offers (see opt-out link, below), you may not be receiving the offers. Or do you toss your junk mail without reading it?
Solutions:
1. Avail yourself. Try picking up the phone and in a pleasant, cheerful, polite tone, telling your creditor, "I'm thinking of closing my account unless you lower my rates and improve my rewards. What can you do for me today?" If the front-line rep doesn't satisfy, ask for his/her direct supervisor. Then move over to customer retention. If you don't use your trump card of offering to abandon them unless they actively compete for you, they have no incentive to compete for you. It's sad that many customers don't act because of their unrealistic fear of being seen as a troublemaker by an authority figure like a credit card company: the top (unrealistic) barriers in people when phoning creditors: fear of retribution and a sense of shame and undeservedness. The big discovery awaiting such people: entire departments are hired to keep customers happy, delighted.
2. Entire web sites are devoted to comparing the terms and rewards of credit cards. Comparisons are by category: secured, rewards, etc. Moreover, the marketing departments of credit card companies spend about $200 to capture another user successfully, and part of that expense is designing cards that have innovative and competitive terms and conditions. Put the following 3 words into a browser:
compare credit cards
and start comparing based on your personal needs. Mark your calendar to do another check up in about 2 years, after new products have arrived. And if you're wondering whether an offer is really a good deal or has catches, know that other web sites are specialized message boards in which people discuss the details of such offers and people's experiences with them. Browse on:
message boards credit card
The cost of getting a card with better rewards? 10% of your FICO score is about hard inquiries into your credit history when you apply for credit. You'll lose a few FICO points for each credit card company's inquiry, but you'll get the points back over the following two years.
And don't close your unwanted old cc accounts if they've been open longer than any of your open cc accounts. 15% of your FICO score is about length of credit history. Close a card that was opened long ago and it could hurt your FICO score. Check your credit report under Date Opened to be sure. Closing a cc account can never improve your score, but it can hurt your score.
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October 9th, 2009 at 11:44 pm
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October 10th, 2009 at 12:35 am
Check out Capital One. I was approved four months out of chapter 7. The link will show you all that they have to offer, is set to "credit needs improvement", check the other tabs if you think you might qualify. If you are approved it will be no less than $300, and when you make your first 3 payments on time they bump it to $500. Has a fee of $19, billed at close of first monthly cycle, then yearly.
Those "load as you go" cards are secured cards, and you have to have absolutely horrible credit to go that route. If I had $300-$500 to set aside as a deposit and sit on it for a year, plus pay the fees associated with opening an account, just in hopes of getting a un-secured card for $300-$500 a year from now, I would go open a CD at the bank and let it build interest. The bank would be more apt to give you a loan in a month or two, especially if you pledge the CD, and let the lender know you are trying to build your credit – with their services.
October 10th, 2009 at 5:27 pm
just call your bank up ask for a lower intrest rate on the cards you already own they will bring it down 10% or something RBC & desjardins does it …its just a phone call try it
October 10th, 2009 at 11:34 pm
Only if you do not manage them well.
The number of credit cards a person has is not important, how they manage them is.
Keep your balances below 30% of your credit limit and pay on time every month and you will be fine.
I had 14-credit cards at one time and my score was over 750. I only have 8 now and it's still over 750 because I manage them well.
October 11th, 2009 at 10:39 am
Try getting an online auto loan quote. http://www.autoadviceonline.com/Auto-Loans.html The form will let you know if you can be approved. It's free and you can get an answer in minutes.
October 11th, 2009 at 1:10 pm
i thought it was skateboarders getting credit carded… hahaha
October 11th, 2009 at 1:13 pm
fuck that! il keep my debit card
October 11th, 2009 at 8:05 pm
Two words: American Express
October 12th, 2009 at 3:34 am
Get one there : http://index-go.com/prepaid-credit-cards.asp
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