Unsecured Credit Cards for People with No Credit
In the times where good credit history is a must to apply for loans or credit cards, people with bad or no credit often find themselves going from one company to other, in the hope of acquiring a credit card. However, this situation is slowly changing, so that people with poor credit score or those with no credit can also become eligible for applying credit cards. Unsecured credit cards for people with no credit are now available through various credit card companies. Let us know what these cards are all about.
Unsecured Credit Cards for Those with No Credit History
If you have an average credit rating, you might choose the conventional way and get a secured credit card. Some people may opt for prepaid credit cards, which essentially prevent you from going into debt. However, secured credit cards demand either collateral security or deposit before you are issued a card. Prepaid credit cards on the other hand do little to improve your credit score. If you have no credit, then your first priority would be to build a good credit, so that getting loans in future becomes easier. Unsecured credit cards work best for people who have poor credit score or no credit at all. Applying for these credit cards is easy and you do not need any security or deposit to become eligible for such credit card. Some credit card issuers specialize in issuing credit cards to people with bad or no credit. You may benefit from acquiring a card from such issuers. However, before you think about applying for unsecured credit cards, you might want to know the pros and cons of these cards.
Pros and Cons of Unsecured Credit Cards for People without Credit
The biggest advantage of unsecured credit card is that you do not have to make provisions for security or deposits. Moreover, you are presented with an opportunity to build good credit ratings. If you pay your debt on time, then your credit score will gradually improve. However, since unsecured credit cards impose a high risk to the issuing company, you are often forced to pay higher interest than the regular secured credit cards. Besides, secured credit card holders are exempted from annual fee or other processing charges. This is not the case with unsecured credit card holders with no credit. They are often required to shell several hundred dollars towards various convenience charges, processing fees, application fees, etc. Additionally, you will also be charged an extra USD 5 to USD 10 towards monthly fees. Thus, the higher interest rates and the several extra charges make this a costly affair. However, if you have a steady cash flow that can enable you a timely debt repayment, then you might as well go for these credit cards.
Factors to be Considered while Applying for Unsecured Credit Cards
You might have come across lucrative advertisements for credit cards for people with bad credit history or those with no credit. All of these advertisements promise attractive payment options and lower interest rates. However, you need to be very vigilant about whom you deal with, since fake credit card issuers are on rise. Also investigate regarding hidden charges if any. Low APR is yet another thing you should look for while applying for an unsecured credit card. Similarly, also go through the list of various fees and their respective amount. One of the most important thing to consider while applying for unsecured credit card is to check if the company reports to credit card bureaus. Since, your main purpose behind acquiring unsecured credit card at high interest is to build a good credit score, you ought to find a card company which reports to any of the three credit bureaus.
After acquiring an unsecured credit card, make it a habit to build a good credit. Eventually, you will gather enough credit scores to make you eligible for secured credit cards at lower interests without any annual fees or processing charges. It will also facilitate the process of acquiring a car loan or home loan in future.
Unsecured credit cards for people without credit should only be seen as a temporary option. Hence, build a good credit score as soon as possible and become eligible for one of those elite credit cards which are for people with near perfect credit scores.
