Credit Cards For Bad Credit Scores

Once you have bad credit, it is very hard for someone to get a loan. Since there is no collateral, the lenders are afraid that if they give you a card, you might not be able to pay the bills in the long run. You need to find some ways to get your bad credit behind you. This can be done with a secured card. A secured credit card does not require you to put any collateral. This means that if you do not pay your bills, the companies will take your card from you. These cards will require that you pay an annual fee, and even more if you have bad credit.

A limit in your secured card will be similar to the limit on a regular card, but you cannot overspend because with a secured card you can only spend exactly what you put into the card. There are two types of secured cards, secured with a deposit and secured without a deposit. With a secured card without a deposit, you will be required to pay fees before you can spend any money.

Despite bad credit, you might be able to get a credit card in the future. Financial institutions might be willing to take a chance on you and give you a chance to rebuild your credit. Make sure that before you get a card with fees, that you read all the terms of the loan. Make sure you understand the fees, terms, and how you are going to repay your debt on the card. If at all possible, try to avoid having to pay fees to do a check, pay interest, or pay to have your card cancelled. Since credit card companies make money on interest and other fees, you might spend a lot of money on credit card fees without having a card to show for it. With bad credit, you might have to pay a fee to get the card. This fee will be more than the deposit that you have to put in the card, so you need to decide if the trade offs are worth it. It is important that you can pay off your debt when this card is through for at least the first year. If you can, then it is a good idea to get a card with a small limit and pay as much as you can each month on it. You would do this for as long as it takes to build up good credit history. If you do not pay off your bills in full every month, you will pay a lot of interest. Even with a secured credit card company, you will pay more than at a regular card. Interest rates, amount due, and other charges are all different among all credit cards. With this fact in mind, it might be a good idea to get a card with the lowest interest rate and lowest balance due. You need to make sure that the fees are reasonable so that you could pay off your debt in a timely fashion.

If you have bad credit, you have to work on rebuilding it. This will be harder than it looks. Even if you have a no credit limit credit card, chances are your limit will be very low, and the balance will be very high in the end. Eventually, you will get a regular card with higher limits and will pay off your balance as soon as you can. If you consistently pay more than your minimum payment, your credit score will get better. Banks and other companies want to see you proceed with your financial responsibilities as soon as you can because you may not have a good credit rating forever.

Read More

What You Need To Know About Credit Limit

Lenders use your credit limit as a gauge on two different aspects of your credit. On the one hand it helps them determine how much credit they are willing to extend and on the other it helps them determine how much they are willing to lose if they are stuck in unpaid balances. How do they determine how much they are willing to lose? This works on a percentage of your total balance. For example if your credit limit is $300 and your balance is lengthened so that it is now $330 then your lender may be willing to lose as little as 10% of $300 as long as it is still less than 15% of your balance. The credit utilization rate is the ratio of your credit limit to your credit balance. This is how lenders determine if you can afford the credit. This means that out of every $100 of credit you could be carrying about $50 of debt. The higher your credit utilization ratio then the higher your credit score will be. This is generally good as it shows your ability to handle credit and that you are not over extended. However, if your credit utilization rate is over 25% then you most likely will see a credit limit increase. Lenders like working with consumers who use less than 50% of their available credit. This shows them you are reducing your debt and can be expected to improve your credit score. It may not seem like a big deal to some that they only need to increase their credit limit by $50. However, increasing your credit limit can improve your credit score by more than $100. This is because if your credit utilization rate is high then higher credit limits will not increase the amount of credit potentially available to you. But how do you get an increase of more than $100? You must have great credit to accomplish this. Many times it can take several months of on time payments and an excellent payment history to get credit increased by a company but it can be done. Always ask the lender what factors are involved to increase your credit limit because many times if you ask you may not receive the credit limit increase. It seems like a waste of time to some people but it can be beneficial to you. You credit score is closely tied to your credit limit and it is common to see a credit limit increase by more than $100. This can really help with larger ticket items such as automobiles and home improvements. It can also help you to lower your monthly payment or help to make those payments less than amortized. It all just depends on how the increase happened. It is similar to a gain that you may make on a trading account but in a different way. Credit seems to jump around unlike a stock or investment that can only increase or decrease by the underlying trend of the market.

Read More