While one typically arises out of the other, there are situations in which you might need to be looking for a credit card with bad credit. After all, you usually have to have had a credit card to get bad credit in the first place — though not always.
Perhaps you’re looking for a credit card that has more attractive rates, thereby making it easier to pay off your credit card debt and repair your bad credit.
Whatever the cause though, there are solutions.
Here’s how to go about it:
Review Your Credit Situation First
Sometimes setbacks aren’t as substantial as they might appear to be. Taking the time to check your credit score and look over your credit reports could ease your anxiety as you begin the process. Doing so might even demonstrate there’s no need to be worried at all.
Banks offer credit scores as a service to their customers, so check with yours to learn the procedure. You can get free copies of each of your three credit reports at AnnualCreditReport.com.
Perfect credit isn’t a requirement when you’re seeking approval for a credit card. However, the lower your score the higher the interest you’ll face will be — and qualifying will be more difficult as well.
Look into “Bad Credit” Cards
There are issuers out there willing to work with people who have less than stellar credit histories. They do so because their potential for profit is substantial.
They’ll charge annual fees to have the card, and the interest rates charged for your activities will be very high, but they are out there. Some issuers even offer cards specifically geared to those who are rebuilding credit.
These “subprime” cards also usually entail fees for opening the account and you won’t find the perks associated with traditional cards such as travel insurance and the like.
Consider a Secured Card
This can be a useful tool when you’re enrolled in a debt management plan as this approach lets you back your own credit. You’ll place a deposit with a card issuer, who in turn will afford you a line of credit of equal value. The deposit is refundable, as long as you follow through and meet the terms of the agreement.
Other than that, secured cards work just like standard cards. You’ll get a monthly statement. You’ll be expected to pay for the charges you accrue. You’ll get a minimum monthly payment you must meet and you’ll be charged interest on any balance you carry from month to month, though you should avoid doing so to help stay out of trouble
Borrow Someone Else’s Credit
If you are fortunate enough to have someone in your life willing to help you out, this can be the best solution of the three. It will be the least costly in terms of cash, however it will also be the most expensive if something goes sideways.
Similar in process to getting a co-signer for a loan, becoming an authorized user on another person’s credit card account gives you the benefit of having a card — without the deposits and fees associated with the above solutions.
However, you might not get the opportunity to rebuild your credit history with this approach as all of the activity will be reported as that of the cardholder — unless special arrangements are made. Along these same lines, if you do not hold up your end of the bargain, that person will also be responsible for the charges you make. Many a good relationship has been ruined as a result of trusting friends with credit, so be very careful to handle the responsibility reverently.
Looking for a credit card with bad credit can be an arduous task fraught with anxiety. However, if you follow the advice listed here, you’ll find the process is a lot simpler than you may have originally believed.
