Thinking Money | Free Financial Advice and Tips

Credit Cards for Bad Credit Situations

Posted on 11. May, 2009 in Credit cards

It’s just about required to have a credit card today, but when you have bad credit your options become very limited in terms of credit cards and credit in general. Most credit card companies will decline your application in a matter of seconds. That’s just to be expected. That’s why it’s important to learn about different credit cards so you know which ones will be better for you apply to.

Simply applying to every credit card offer you can reflects badly on you and your credit. If you have trouble managing your credit card debt, and credit card debt help, you should be looking at secured credit cards.

Before you start applying or even looking too seriously into any credit card company… do you know what your credit score is? If not, that’s the first thing you need to do. You need to know where you stand and your credit score will tell you that. As mentioned above, it isn’t good to have a lot of inquiries on your credit. In fact, it can even lower your score. So, get a good idea of your credit and know your credit score. Then start looking into credit cards that specialize in working with people who have poor credit. Don’t expect to get some great card with low payments, though. You may have to even settle for a secured credit card. Both secured and non-secured are usually possible, but you’ll find many more offers for secured credit cards for bad credit.

When you begin your search, don’t believe everything you hear or read. There are many companies that will do you wrong, but claim to be experts in helping you get a card regardless of your bad credit. Often, with these kind of “offers” will end up with a credit card that you owe payments on before you even take it out of your wallet. Sure, any card you get will have more fees than credit cards you could get if you had good credit. But by being careful and taking your time you can find the card that is the least costly and has offers the lowest APR of the bad credit credit cards.

Some “secured” credit cards are used in conjunction with a savings account. You open a savings account and your credit card available spending limit is equal to the amount that you have in your account. This ensures them that even if you aren’t able to make your payment that the cost will be covered. If you do happen to default on your payments, they’ll use the money in your savings account to cover it. This may not seem like a credit card, but it is one way you can start repairing your bad name in the eyes of credit card companies. If you keep your payments made on time, you’ll start to show some responsibility and credit-worthiness over time.

Some bad credit credit cards will give you spending limits that are seemingly very low. This is a benefit for both you and the credit card company. This means you can’t end up with a ridiculous amount of charges to try to pay for, and the company minimizes any loss if you don’t hold up your end of the deal. Same as with the card described above, this is a good way to start proving that you can be trusted. Keep your payments current and in time you’ll be able to move up to a better credit card.

From: Free Credit Report Resource

Tags: bad credit, Credit Card