Bad credit can make it hard to do a lot of things and one of the most difficult things to obtain if you have poor credit is a credit card. It makes sense–if you were a credit card issuer and you had an applicant that had struggled to pay their bill on time in the past, would you be eager to lend to that borrower? Probably not. However, there are good reasons for an individual with bad credit to have a credit card.
One of the challenges of having bad credit is that it’s hard to establish new opportunities to fix that credit. One of the best ways to repair bad credit is to start making timely payments on something though and a new credit card is a great way to start that process. Even with a poor payment history, many credit card companies will consider your current income and your current debt ratio in deciding whether or not to issue a card. Your initial line of credit might be low, but it’s a starting point! If you’re having trouble obtaining credit, here are some tips that might help.
– Limit Your Applications: Every credit card application is recorded and can affect your credit score. Too many denied applications will make other lenders and credit card issuers view you as a credit risk, so do some homework and try to determine credit card issuers that might be more likely to extend credit to someone with poor credit. Don’t worry as much about the interest rate on the card as you should be using the card sparingly and paying it off each month to rebuild credit.
– Get A Secured Card: Some credit card companies are not going to willing to extend credit to a risky borrower without some collateral. One common method of securing credit is to send a check to the card issuer. Many card companies will issue a line of credit for $1000 if you’re willing to send them a check that they can hold against that line of credit in case you aren’t able to make payments. As long as you make your payments on time, the money you secure your loan with will earn interest just like it would in a savings account. Securing your credit line with collateral will also give you incentive to make payments on time, since you have something on the line. After you establish a pattern of making reliable payments, many companies will return your deposit to you.
– Communicate With Your Credit Card Company: If you have struggled to make payments with a credit card issuer in the past and they are threatening to close your line of credit, try to work something out that will allow you to continue making payments. It’s much easier to maintain an existing relationship with an issuer than to establish a new one, especially with borderline credit.
– Monitor Your Credit Report: When you’re trying to repair your credit, the last thing you need is a mistake sending your credit score even lower. It is worth the cost to use a reasonably-priced credit monitoring service and make sure your credit report is a true reflection of your payment history.
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