How to Get a Credit Card With Bad Credit
Banks and financial institutions rarely provide credit cards to individuals with bad credit or low credit scores. This does not necessarily prevent them from doing so, but since the bank undertakes a higher degree of risk in such cases, getting a credit card when you're troubled with bad credit is a difficult task.
To get credit cards for bad credit, one has to think ahead and make arrangements for the future. Since the individual has a low credit score, he/she must take decisive action in order to improve the credit score. Getting a credit card while having bad credit is as difficult as making other large purchases with bad credit. The lenders or the sellers, have to think about their own benefit, similar to the situation where they provide loans, and they would be cautious about issuing credit cards for people with bad credit and who may not be creditworthy.
Apply for a Secured Credit Card
To obtain a secured credit card from a particular bank, you will be required to open a savings account with that bank. The amount deposited in this account will be your credit limit, which you cannot exceed. This account merely acts as collateral, so if you fail to pay your bills, they automatically deduct that amount from this account.
Apply for a Prepaid Credit Card
A prepaid credit card works primarily like a debit card. For individuals who have a bad credit score due to bankruptcy, foreclosure or a bad credit history, this is an excellent option for them. The borrower makes an advance payment based on how much he plans to spend and then all his subsequent purchases are charged against that amount. This is a very effective method of improving one's credit score over a period of time.
Apply for a Small Store Credit Card
Getting a credit card with bad credit is more likely through smaller retail stores. They charge slightly higher rates of interest but this is a good option to improve one's credit score. Make it a point to pay off the minimum monthly installments and this should surely help your credit score. Keep in mind that it is not a good idea to go overboard with your applications. A number of inquiries about your credit history in a short duration can negatively affect your credit score.
Apply for a Co-Signed Credit Card
In case the other options are not feasible, you could choose to get a co-signed credit card with a friend or a family member who has good credit history. If you are unable to repay, then the debt gets transferred to them. Getting a co-signee with a good credit score will benefit you immensely.
Approach a Familiar Financial Institution
Another alternative for you is to talk to a bank or a financial institution that you have done business with before. The relationship you share with them will work in your favor when you apply for a credit card. There is no bank that would willingly give up a customer, and if they know you and your history, they will come up with suitable solutions for you, no matter how bad your credit may be.
Once you've worked out how to do this, you should also be aware of the benefits of doing so. This is an excellent means of credit repair and improving bad credit ratings. Keep in mind that before issuing a credit card, a lender will not look only at your payment history. There are other parameters that could work in your favor as well, while getting a credit card with bad credit. A steady job, permanent residency and a good debt-to-income ratio will help you get a credit card. Credit scores are not irreparable and if treated properly, they can be repaired and a high score can be maintained.
