Getting a credit card when you have bad credit
is no easy task. Whether its a bad credit
score or limited credit, you will pay a lot more for the luxury
of credit unless you have a pristine credit score. In this economy
and with bankruptcy filing rates up, credit card issues are more
choosey than ever and with good reason. The national average for
a person in debt is around 9,000.00 and with unemployment rates
being up, less people can pay back their loans -- even their monthly
payments are getting hard to manage.
If you're in a position to pick and choose your
credit card company then here's a few things to consider. Whether
you're trying to get a secured credit card (for people with bad
credit) or a credit card based on a good credit score, we've got
a few tips for you.
Choose Credit Cards Wisely
Having too many credit cards open can harm your credit score. When
a potential lender looks to give you a line of credit, the first
thing they'll take a look at is how much debt you owe. If your debt
balances are almost as high as your credit limits, you're going
to be considered more of a risk as well as it impacting your credit
scores.
Watch out for special credit card offers
On the surface those special offers seem pretty good but usually
dig a little deeper and you'll find a lot of hidden fees including
a balance transfer fees and introductory interest rates that rise
over time. Pay attention to default interest rates as well because
those can be pricey. Some credit cards will jack your interest rate
up by 10 points if you become past due.
Bad Credit Credit Cards
There are banks in the business of supplying credit to people with
bad credit histories. There is a lot of misconception about bad
credit credit cards though. If you are currently in collections,
have a tax lien or show a recent bankruptcy, most credit card companies
will not take a risk on you. Bad credit card issuers usually mean
those with a history of bad credit -- not current bad credit. If
you cant pay the debts you have at the moment then what makes you
think a credit card company is going to give you money? They usually
will NOT. An exception however are secured credit cards. A secured
credit card is usually tied to a savings account that you have set
aside to cover the debt in case you cant pay it. The credit card
issuer will tie the credit card to the account and make sure you
cant access it. If and when a time comes that you cant make the
credit card payment or become seriously past due, the credit card
company will take the funds to pay off the card. It's a good way
for you to rebuild your credit by using a secured credit cards.
Not all banks offer a secured credit card program but most credit
unions do.
So which credit card?What credit
card issuer to choose? That all depends on you and your credit
history. If you are currently behind on your bills, opening another
credit card isn't going to do much for you. On the other hand, if
you are just starting out, a credit card is a way great way to build
a credit history. Keep an eye on how many you open. Not only is
it a good idea to keep you from getting buried in debt but it will
do much more for your credit score by having no more than 2 -3 credit
cards.
Need to research credit cards? We've got
a list of the best credit cards based on rates, credit rating and
fees.
