How to Get Credit Cards for Bad Credit?

Are You In Search of Credit Cards for Bad Credit?

Having a bad credit may not be the end of the road for people who are willing to do something about it. Although the road from having a bad credit turned into good credit may be steep, it is not an impossible adventure. There are people who were once having their credit in mess but are now enjoying good credit ratings today. If you desire to get out of your bad credit status, searching for credit cards for bad credit can be the way out as you may not qualify for regular credit card. Please, I want you to take note of my words. I didn’t say that you should search for credit cards. Regular credit cards are not the option for you. You are to search for credit cards for bad credit. Of course, there are many of them in the market. They are specifically designed for people with bad credit who may be finding it difficult to secure regular credit card. The option of using debit card cannot help the situation either. The reason is that you can’t use debit card to build your credit as the transactions you carry out with it will not be reported to credit bureaus. But if you succeed in getting credit cards that are specifically designed for people with bad credit, whatever transactions you carry out with the card will be reported to the major credit bureaus.

The first step you may need to take is to before seeking for credit cards for bad credit as explained above is to ascertain your credit score. The reason is that the so called credit cards for bad credit are in categories in the sense that, they have different levels of APR which will apply to individuals based on their credit status. You may think that your credit is bad but if you don’t find out what it is, it will just be a guesswork. You can request for your free credit report. Possibly, there may even be some errors or mistakes on your report which if corrected can improve your credit. I will talk more on how you can get your free credit report later.

Read Also: How to Get Your Free Credit Report

Features of Credit Cards for Bad Credit

What are the distinguishing features you are to expect in credit cards for bad credit? If you are used to regular credit cards, you should not expect the same features in a bad credit credit card.

High APR

Essentially, credit cards for bad credit usually come with very high annual percentage rates(APR). It could range from 14% to 24% APR. This is quite high. The reason is that, people with bad credit are considered risky as there is tendency for them to default in payments. And this may result to loss of money to the lender.  The level of the damage to your credit will determine the APR that will be charged to your credit card. But if your credit is bad, you can expect that you may be placed on the highest APR. Nevertheless, if you shop around from card companies where you can be pre-qualified without affecting your credit score, you will find credit cards for bad credit with APR that is not too high.

Low Credit Limit

The credit limit on credit cards for bad credit may be lower than what you can enjoy with regular credit cards. Having a low credit limit is actually a major disadvantage to any bad credit credit card. It can force the card holder to max out his card thereby having further negative effects on his credit score. If your credit utilization is too high, it is an indication that you may be under financial pressure. If you want a higher credit limit, it might be better to apply for a secured credit card. This will require that you deposit certain amount as collateral. In most cases, your credit limit will be equal to the amount you drop as collateral. But if you credit is not extremely bad, you can get a secured credit card with a deposit that is lower than the credit limit you will be granted. The essence of the collateral is that, in case you default in payment, the lender will keep your deposit to pay off your card balance. One good thing about secured credit card is that, it can be converted to an unsecured credit card if you have been making your payment on a regular basis over the past one or two years. When it is converted, you will no longer be requested to make a deposit as collateral.

Read Also: A Guide on How to Increase Your Credit Limit

Credit Needed

For anyone to decide to apply for credit cards for bad credit, you should expect that his credit is bad. No one having good credit will wake up and say the next thing he wants to do is to apply for a bad credit credit card. The card companies understand this. Therefore, they don’t expect you to have good or excellent credit score. So, if your credit is bad, you can still get a bad credit credit card. In addition to credit cards for bad credit , some credit card companies also accept people who were bankrupt.

Limited or No Bonus

Other credit cards like travel credit cards, balance transfer cards and reward credit cards may come with bonus, benefits and other packages. Such benefits may include cash back bonus, 0% intro APR on purchases and balance transfer, mileage points, no foreign transaction fees etc. You may not expect these offers in credit cards for bad credit. But if you search very well, you may find a bad credit credit card that offer cash back on purchases.

Annual fees

Most of the credit card companies charge annual fee on their credit cards for bad credit. So when you are shopping around, your focus should not be on getting a low APR alone. Annual fee can significantly add to the cost of a bad credit credit card with a low APR. If you know you can use your card responsibly, it is actually better to choose a bad credit credit card with no or very low annual fee over other credit cards for bad credit with a lower APR. The reason is that, if you don’t carry balance on your card, you can actually avoid paying interest at the end of the month.

How to Use Bad Credit Credit Card to Repair Your Credit

I don’t want to assume that you already know how you can use your card in a way that will help you turn your credit from bad to good. To start with, I want you to reflect back and find out those things you did wrong with your previous cards. I am saying this because it is not automatic that having credit cards for bad credit will help you repair your credit. The card will not do it for you. It is you who can make it happen. You need to ensure that you use the card responsibly by doing the following:

Don’t Max Out Your Card

The fact that you have a particular credit limit on your card does not mean that you need to exhaust the limit. You should endeavour to keep your credit utilization very low. Use can achieve this by using your card to buy petty items which carry no huge price. Your credit utilization ratio is one of the vital keys the credit bureaus used in determining your credit score. It is to your advantage if the ratio is low. Something in the range of thirty per cent and below is proper. How can you calculate your credit utilization ratio? It is very simple. It is what you can do on your own. Let’s look at this example. If your credit limit is $4,000 and you spent $1,000 using your card in a month, then your credit utilization ratio is 25%. One of the reasons you should not max out your card is that you don’t know exactly when your credit card issuer will report your balance to the credit bureaus. It will be a mistake to assume that your credit score will not be affected in as much you pay off your card balance at the end of the month.

Don’t make minimum payment

The idea of making a minimum payment on credit cards for bad credit is a trap that can drag one further into debt. If you make minimum payment, the implication is that you will be carrying balance on the card. Of course, we all know that the annual percentage rates on credit cards for bad credit are quite high. Instead of paying high interest on card balance, it is better to channel the money you will be using in paying the interest into paying off the card balance.

Don’t make late payment

It is not enough to make payments on your card. You need to ensure that you make your payment on time. In order to ensure you make payment on time, you can set up payment reminders. Alternatively, you can arrange with your card issuer to send you reminders in form of emails or text messages at the end of each billing cycle. Late payment can hurt your credit. In fact, records of late payments can stay seven years on your credit report. Therefore, you should do all you can do to avoid it. The timeliness of your payments plays a critical role in determining your credit score.

Read Also: Effects of Late Payment on Credit Score

Don’t apply for too many cards

With advertisements of credit cards for bad credit all over the internet offering pre-qualification without affecting your credit score, one can be tempted to apply for many of them. Even, if your credit is good, applying for many credit cards at a time can harm your credit how much more will it affect people with bad credit.

Get Credit Report

There are people who are victims of bad credit today who cannot explain why and how they find themselves in such mess. I want you to know that it is not only what you do with your credit card that affect your credit rating. There are other factors which may be responsible for bad credit score. among them are possible errors and mistakes in your credit report. That is why it is essential that you get your credit report once in a while so that you can review it to ensure that it is free of errors and mistakes. Every card holder is entitled to one free credit report from each of the three major credit bureaus at every twelve month interval. You can apply for your free annual report through Annualcreditreport.com. You have the option of applying for the free credit report from the three credit bureaus at the same time, This will enable you to compare the reports and find out if there are discrepancies. You can also decide to apply for them at three different times.

Motivation about Credit Cards for Bad Credit

If you look at the features of all the credit cards for bad credits that you may likely come across while shopping round, you may be discouraged because their terms are not that friendly. The main motivation to you should be the opportunity the card offers you to rebuild your credit. If you can discipline yourself by paying the price now, you will be happy about it tomorrow. Before you realise what is happening, you will discover that your credit score has improved, Although you may not be able to achieve this overnight, if you use your card responsibly, you will soon will out of the wood. Therefore, your motivation should be the benefits you tend to enjoy if you succeed in repairing your credit. The benefits include the following:

  • Better credit cards: As mentioned earlier that bad credit should not be a permanent thing. By the time you are able to repair your credit, you will be qualified for regular credit cards with lower APR. The fact that you have more options to choose from will allow you to shop for low interest cards. You can also enjoy bonuses and other benefits the regular cards offer.
  • Competitive quotes on insurance: It is not only credit cards companies that are interested in your credit. Other financial institutions such as insurance companies rely on your credit score in assessing your suitability for their products. For instance, a person with good credit score will enjoy cheaper insurance quote than another person with a bad credit.
  • Ability to rent: Landlords are not left behind when it comes to the users of credit information. If you have a good credit score, you will be able to get approved to rent a house or apartment. No landlord will be willing to rent his house to someone they know will not be able to pay his rent when due.
  • Employment opportunity: Some employers will like to carry out a background check on their prospective employees before they are finally offered the job. So, it is not all about academic qualifications these days. Your academic qualification and experience are not enough criteria that you will secure a job.If you are planning to change a job, it will be a good idea to ensure you repair your credit if your credit is already bad before making any move.

If you consider all these benefits, you will see enough reasons why you should not be bothered about the temporary pains you may need to endure while using your bad credit credit card.

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