Credit Cards for Bad Credit History
There are several reasons that might cause your credit history to deteriorate and the credit report to become blemished. Well, don't blame yourself because life, as all of us know, is not a straight-lined path and uncertainty is an everyday ordeal. But the real problem is that the risks and uncertainty, that you tend to suffer from, gets recorded on your credit report and is termed as your credit history. Your credit history gets reviewed on several occasions such as while opening bank accounts, while taking up a loan or credit card. The drawback of such a viewing is that you might have to face denials and stringent interest rates, terms and conditions. The second significant drawback is that your credit score gets affected. Why? Because the prominent credit rating agencies and credit reporting companies use formulas, such as the FICO score, to calculate your credit score and report. This formula is principally made up of many parameters related to your credit related activities with 15% of the output score being the length of your credit history. Hence, credit card companies have come up with the concept of credit cards specifically catered for people with bad credit history, to avoid denial of credit card applications.
These credit card offers for people with bad credit history, however, have to be read very carefully. As there are many minor details that have to be considered while signing the agreement with the credit card companies. Here's an explanation to all the terms and conditions that you will have to check while getting such credit cards.
Key Features
Credit cards offers for bad credit state the credit history while approving the credit card. These credit cards are for people who have a score that is lower than 500. These credit cards have some features that you must definitely know...
- In most cases, credit cards for bad credit history are secured debts. It basically means that you will have to pledge assets to the credit card companies. Maximum high limit credit cards for bad credit, are included in this category. Pledged assets can be lawfully taken over after default payments. Out of all the other credit cards the secured credit cards for bad credit are approved quickly.
- Some credit cards are not secured but they a have a lower credit limit. This kind of credit card is an ideal choice, as you do not have to pledge a security and there is no risk of losing it. You will find many such offers such as unsecured credit cards for bad credit or unsecured debt credit cards.
- Another variant is the low fixed rate credit cards, where the credit card has a fixed interest charge that will be charged uniformly in every month. The advantage of such an APR (annual percentage rate) is that it is very cheap and though it is charged every month, you will have to pay only for that transactions that you have actually made. Another advantage of such a credit card is that you have to pay very low membership fees.
- There are some other credit card processing facilities that provide a credit card with variable and floating APR. Such a credit card is definitely helpful, as you will be charged lower APR for some purchases such as purchases for basic necessities. These APR's have a lower and higher limit such as 7% to 10% (example).
Getting a credit card for bad credit is not that a difficult task, owing to the fact that a considerable number of companies are willing to take up the risk of bad credit. To get such a credit card, go to the website of prominent companies such as CitiGroup, MasterCard, VISA, Capital One, Centennial cards and Premier cards. Make it a point to list down pros and cons and all the possible options that you find on the web. Next calculate the actual amount that you would owe to the company after using the card every month. For this you will have to calculate debt to income ratio or you can calculate your own debt ratio. This sum should include all your membership fees and credit card processing charges. After that, check if the card is a secured one or an unsecured one. The third thing that you would need to do is check the APR of the card. Knowing the nature and charges of APR is very important to estimate your credit card debt that you might incur annually. Compare all these facts with your salary, other debts and loans, and essential expenditures. If you can afford the payments on time and easily, go for the offer that suits you best.
One very important aspect of these credit cards, that I would like to highlight, it is important that you make all your payments on time. You should be making the payment the moment that bill touches the mail box. Have a check ready even before the bill arrives. Calculate before spending, and refrain from spending. In case of the credit card is a secured one, you might lose your pledged asset if you default a payment.
