Credit Cards for Bad Credit
The number of people with bad credit scores and history is rising at a great pace. Improper financial planning and management is the main reason for rising number of defaults on credit card payments. The credit score of a person gets affected when he does not pay his credit card bills on time and he may face problems while securing loans again. However, some provisions from banks and credit card companies can help people with bad credit get credit cards. Let’s see how these can be obtained.
Getting Credit Cards with Poor Credit
It is a well-known fact that before sanctioning credit cards, the creditworthiness of the individual is taken into consideration. The creditworthiness of people who have paid their past credit card dues will naturally be higher than those who have made late payments or defaulted on payments. There are some standard credit score ranges that are referred to decide the creditworthiness of an individual. Credit ratings are generally accessed using the FICO rating method or the Vantage method.
The FICO rating method consists of credit scores ranging from 760 to 500. The credit score between 760 to 849 is considered to be an excellent credit score while ranging between 700 to 759 is considered to be a good one. If your credit score falls between the range of 660 to 699, then it would be treated as an average score. The credit scores in the range of 580 to 619 are poor, between 500 and 579 are bad. In the Vintage method, the score between 901 to 990 is the excellent one while that between 801 to 900 is the good one.
This is followed by average score between 701 to 800, poor score between 601 to 700 and bad score between 501 to 600. These cards can actually be an opportunity for these people to improve their scores and get loans easily in the future.
Applying for a secured credit card can be the option for you if you are getting it sanctioned from your bank. In this case, your credit line will be decided as per the percentage of your deposits. At many places, there is a provision that you can have one more person to co-sign the credit card. So, if you know someone from your family having a good credit history, you can always request him to co-sign the credit card with you.
For getting the credit cards, you will have to submit details regarding your employment, income details, account details and submit a fully filled application form along with the fee. A monthly processing fee ranging from five dollars to fifteen dollars might also be charged by some financial institutions. You can contact some well placed people in the banking industry for these cards.
General Information about these Cards
Usually high interest rates would be charged as compared to the rates charge for other customers. So, you should be prepared to shell out more amount in the form of interest payments. The annual percentage rate levied can be high and in some cases can be between twenty-five to thirty percent. Many companies will ask you to secure the debt with the help of an asset which means that you will have to pay the debt on time to protect your asset.
Having defaulted earlier, the lenders this time will not take a bigger chance and keep your credit limit lower and will also take into consideration your monthly income for deciding it. Getting unsecured credit cards might be a very difficult task at times.
Getting credit cards with bad credit will not be a difficult task if you follow the above instructions. Though these cards are given, you should try your best to keep your credit score good to take advantage of special interest rates and attractive repayment schedule. All the best!
