Applying for a Credit Card with Bad Credit

Making use of the right credit card can go a long way toward improving a bad credit score. Credit problems can seem insurmountable, but there are proven ways of building your score over time so that you can gain access to the capital you need. The scoring system compiles historical transaction data about when you open new accounts, make your payments, and settle your debts. It then uses sophisticated algorithms to determine the likelihood of you repaying a prospective loan based on historical information. When you open a new credit card and make your payments on time, you can show the credit score system that you are a responsible borrower.

The most significant challenge associated with rebuilding your credit is succeeding at opening a new credit card. If you have bad credit, you will have a hard time getting approved for regular credit cards since lenders will assume that your risk of not repaying your loan is high. In most cases, applying for a secured credit card will give you the best chances of being approved when you have bad credit. You pay an initial down payment when you open an account, but you will get your money back in the future if you make your payments on time. There are also unsecured credit cards with balances of about $200 available for low-credit borrowers. The best way of choosing a credit card that will start you on the road to improving your financial situation is to find one that matches your unique needs and goals.

Here are some of the benefits of opening a new credit card:

Improved credit score — The most significant advantage associated with opening a new credit card is the opportunity to improve your credit score. Opening a new credit card is often seen as the first step toward building or repairing credit since doing so gives you a chance to establish a good credit history. You can improve your credit score at a rapid rate when you choose a credit card that matches your credit situation. Once you make your first payment on time, your credit score will receive an immediate boost.

Borrow significant amounts — Many people who have low credit assume that they can only borrow a trivial amount of money when they open a new credit card. Although borrowers with bad credit cannot take out as much as borrowers with an immaculate credit score, the reality is that secured credit cards can be used to borrow several thousand dollars in many cases. Most secured credit cards will give you at least $500 initially, but you can increase your credit limit as time goes on by making your payments on time. You may have to put more money down, but you can gradually work your way up to increase your credit limit.

Work toward an unsecured card — When you choose to take out a secured credit card, the option of refinancing in the future never goes away. You can transfer your balance over to an unsecured card once you have built your credit score to a sufficient level. The process of earning your way toward an unsecured card will also open doors to other credit options that you can use to finance the purchases you need. Once you obtain an unsecured card, you can improve your credit score further by continuing to make your payments on time.

Learn to beat the credit score system — Everyone makes mistakes in life, and people who learn from their shortcomings emerge stronger in the end. Many people with bad credit never meant to do anything wrong, but the credit score system can hand down penalties in ways that can appear arbitrary. The process of taking out a new credit card and making your payments teaches valuable lessons about how to make decisions that improve your credit score. Additionally, credit cards targeted at borrowers with bad credit usually give detailed reports each month about your credit history, and you can learn valuable tips from this information.

These are some of the credit cards recommended for people with bad credit:

Capital One Secured Mastercard — If you are looking for a secured credit card, Capital One offers a solution with no annual fee. Borrowers start with a $200 credit line. You will have to put down at least $49 to open the card, but you can increase your credit limit without putting more money down when you make your payments on time. The maximum APR associated with Capital One’s Mastercard is 24.99 percent, and the card is available to borrowers with credit scores as low as 300.

Credit One Bank Platinum Visa for Rebuilding Credit — Credit One Bank offers a card designed for people looking to rebuild their credit. You can pre-qualify for it without getting an inquiry on your credit history. Customers can use an online platform to check their credit score at any time. You can qualify for Credit One Bank’s card with a credit score as low as 300. The card has an APR of up to 25.24 percent, and imposes an annual fee is $99 for borrowers with weak credit, which you can waive once your credit score increases.

Indigo Mastercard — If your credit is moderately bad, you may want to consider Indigo’s solution. As long as your credit score is above about 450, you have a good chance of being approved for Indigo’s unsecured card. The card’s credit limit locks at $300, and its regular APR is 23.9 percent. The annual fee starts at $99, but it goes down each year as you make your payments on time.

Milestone Mastercard — The Milestone Mastercard is an unsecured card that considers borrowers with low credit. The card has a minimum annual fee of $35 and a regular APR of 23.9 percent. Although most borrowers need a credit score of about 400 to qualify, the card gives you all the benefits of an ordinary Mastercard. If you are on a tight budget, you should try to apply for the Milestone Mastercard before looking elsewhere since the card does not require a security deposit.

Another post from Gina Wilson – Credit & Loans Specialist Blogger.

About the Author

Gina Wilson
I am an ex banking professional with over 6 years in credit administration and an avid blogger that writes useful posts to help those that want to navigate today's crazy world of mortgages, property loans and credit.

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