Anyone who has ever struggled with poor credit understands how hard it can be to get a credit card and begin the credit rebuilding process. Being able to demonstrate the responsible use of a credit card can speak volumes to credit reporting agencies and result in a better credit score. But how can you get a credit card when bad credit prevents you from doing so? The answer is to get a credit card specifically targeted toward individuals who have bad credit.
Do You Actually Need a Credit Card To Rebuild Your Credit?
Believe it or not, getting a card specifically for those with bad credit may not be your best option. The best way to determine whether or not you actually need this type of card is to get your credit score from the three major credit reporting agencies. You may be surprised to discover that your credit is better than you thought. Or, you could find out that there is an error on your report that, once corrected, will restore your credit to its former glory.
Card Options for Those with Poor Credit Scores
The prepaid credit card offers the same conveniences as a credit card, but without the requirements that other credit cards need their applicants to meet. All that’s needed with a prepaid card is to have access to cash that can be loaded onto it. Of course, there are usually fees attached to the use of the prepaid credit card. The best way to get an idea of what these are is to check out the fine print before applying. As well, those looking to rebuild their bad credit will not benefit from the prepaid option, as it does not improve your credit score.
The secured card, however, will help those with bad credit to rebuild. One difference between the secured card and a regular credit card is that the former requires the card bearer to make a cash deposit before they are granted access to the credit being offered. This deposit is looked upon as a security deposit, and is treated as such. The good thing about a secured card is that it allows the bearer to move through different levels until they have reached the point where they can obtain a conventional credit card. But this card does carry caveats – the holder must ensure that balances are paid in full and on time. Otherwise, the bearer will have to pay fees in addition to interest, which can add up the more late payments that are made.
Once you get your credit score another option is the unsecured credit card. Similar to a conventional card, the unsecured option does have stricter terms. For example, a holder of an unsecured card is prohibited from going over their credit limit. As well, they may incur a much higher interest rate on their balances than they may with a regular credit card. Finally, the bearer of an unsecured credit card may only be able to get credit in amounts that are much lower than those with a conventional card.
The high interest card, available in both secured and unsecured versions is just as the name may suggest; bearers of this card will be subject to higher interest than those who may hold a conventional card. However, the higher interest has a purpose; it serves to provide protection to the company issuing the card against the risk it is taking in offering the product to those with poor credit. Usually, customers having this type of card will be able to enjoy adjusted interest if they are able to make their payments on time.
Credit cards with low limits are also available. Not only does this make it easier for a person with bad credit to pay, but it also limits the amount that can be charged to the card. A smart feature of many of these cards is that a transaction exceeding the credit limit will not be allowed by the company who provides the card.