Once you have bad credit, getting credit cards for bad credit seems difficult if not impossible.
Fret not, a solutions is there for you on not only how to get a credit card if you have bad credit, but also on how to use that credit card for bad credit as a stepping stone to improving your credit, and ultimately, once you have great credit, getting all those juicy 0% credit cards offers.
Here are the 5 secrets about getting credit cards for bad credit.
1. Your Credit Report May Be Wrong
There are 3 major credit reporting agencies in the US: Equifax, Experian, and TransUnion. You would hope that all the financial information that they have about you (did you pay your bills on time, did you file for bankruptcy, etc.) is correct, but unfortunately that is not always the case.
So, the first thing you want to make sure is that your bad credit is based on accurate information. How can you do that? Luckily by federal law, these 3 agencies have to provide a FREE credit report once a year for all of us.
There is a website where you can request the free credit reports from all 3 agencies. The website where you can go to do that conveniently all in one place is AnnualCreditReport.com.
Be careful not to fall for any of the many scam sites that try to charge you money for what you could be getting for free at AnnualCreditReport.com.
This short FOX news report discusses AnnualCreditReport.com and related topics in more detail.
Review your credit reports carefully, and if you find anything that is wrong contact the credit reporting agency and ask them to correct it. If that fixes your bad credit, good for you. Congrats!
Otherwise, here are the remaining 4 secrets for getting credit cards for bad credit.
2. Use Your Existing Financial Relationships
If you have been a long time customer of a particular financial institution (bank, credit union, etc.), they may be willing to give you a credit card even though you have bad credit. Credit reports are used to evaluate the likelihood that someone will pay their debt back.
But they don’t tell the whole story. You may have been a very responsible person all your life and your bad credit is only due to circumstances out of your control like a divorce or medical bills. Someone who knows you may be able to work with you, give you credit, and ignore that bad credit report.
3. Get A Secured Credit Card
If you can’t get a credit card because of bad credit, it is because the bank or credit union is worried that you won’t pay back the money that you owe. But there is a way for you to get a credit card so that you can use a credit card again instead of cash when you are out shopping or going out with your friends, and at the same time, give the banks something so they don’t worry.
It is called a secured credit card. The way it works is like this.
If you want a credit line of $1,000, the bank will ask you to put $1,000 in a savings account as collateral. If you are responsible and always pay your secured credit card bills on time, that $1,000 will sit safely in your savings account until you either close the secured credit, or the bank feels that it does not need that collateral anymore because you have been such a responsible customer, and upgrades you to a regular unsecured credit card.
If you achieve this, you have actually improved your credit and are well on your way to having a good credit.
This short FOX news report discusses secured credit cards in more detail.
4. Get A Subprime Credit Card
There are a few credit card companies that specialize on people with bad credit, but they hit you hard with high fees and high interest rates, like charging you an application fee of $90. Use them only as a last resort, and make sure to always pay them off in full each month.
If you are comfortable that you can do that, these credit cards, like the secured credit cards, can help you improve your credit by demonstrating that you are behaving responsibly.
5. Bad Credit Isn’t Forever
Credit cards for bad credit usually don’t have attractive terms. They often have low limits, high fees, poor service, and charge a high interest rate. But know that this is only a temporary situation if you work on your situation.
If you have corrected your credit report and paid all your bills on time, within 12 months your credit should improve significantly because you demonstrated that you turned a corner, and that you are responsible with your credit.
If you continue on this road, it won’t be too long before you receive those juicy 0% credit card offers for people with great credit.