Credit Cards for People with Bad Credit
Whenever you apply for a credit card, the financial institution goes through your credit history, which is a part of credit card processing to determine your worthiness. If they find that you have not been making regular payments on time, then they may not approve you for it, or may approve with several strings attached. This is because the credit card companies have to take a huge risk by giving you this card as they are uncertain about the payments from your side.
Due to this risk factor that the banks take, they charge a higher rate of interest for people with bad credit history. You need to think and plan ahead for the future in case you want to apply for one. Improving credit score should be your top priority, and there is no better way than to make payments on time. With such cards, you may not be able to buy high-priced things, but small transactions, with payments on time can go a long way in getting you into the good books of credit rating agencies.
Unsecured Credit Cards
You may have heard of secured cards, wherein you have to pay the deposit to get one, but there are unsecured ones as well, for which you can be eligible. But, for that, you may need to pay a credit card cash advance, a high account opening fee, besides a higher rate of interest. A good option which you can avail of is applying for one in the same bank in which you have a banking account.
The most important advantage of this is that they can look at the history of your bank account, and determine how much risk they should take. Moreover, you can ask the bank to debit the monthly payment from your account directly. Once you have gone through the long drawn out process of credit repair, not only your credit limit will be raised, but you will also be able to negotiate a lower rate of interest.
Credit Cards With No Security Deposit
Getting the approval for an unsecured card with no deposit may be tough, and this is where a co-signed card can come to your rescue. In such cards, the bank would require the signature of another person along with you (usually a friend or family member), so that you can get one easily. In case you can’t make the payment, the bank has an assurance that the co-signee would make the payments. You need to make sure that the co-signee has a good financial record, so that the approval process is simpler. If you don’t have a bank account, getting a co-signer is one of the best options that can be considered.
Most of the time, banks may want you to pay a security deposit so that in case you default on a payment, they are assured of something substantial. If you don’t like the idea of paying it, you can choose to apply for a small store credit card. No doubt they charge higher interest rates, but it is a good option if you are looking to improve your credit report.
You need to ensure that you pay the minimum amount on time, or else it would serve no purpose. Alternatively, you can also speak with a bank where you have dealt before. The relationship you have with them may stand you in good stead for being approved for one. There are high-limit credit cards for the same as well, so you can have a look at them, too.
Thus, all in all, getting a credit card in such case may be difficult but isn’t impossible. Search around for the best deal before zeroing on one financial institution, and never forget to go through the terms and conditions so that you know the amount you’ll need to pay.