Getting a credit card with bad credit is an arduous task in today’s financial scenario; however, there are plenty of viable solutions available for the same in the market.
Banks and financial institutions rarely provide credit cards to individuals with bad 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, it shows reluctance in issuing a card to such individuals.
To get credit cards in such a case, 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 score. Getting a credit card in such a situation is as difficult as making other large purchases with the same. The lenders, or the sellers have to think about their own benefit similar to the situation, where they provide loans; and they will be cautious about issuing credit cards to the people, who may not be worthy of it.
Apply for a Secured Card
To obtain it 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, the bank automatically deducts that amount from the account.
Apply for a Prepaid Card
This card works primarily like a debit card. For individuals who have a bad credit score, due to bankruptcy, foreclosure, late payment, or a bad history, this is an excellent option. 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 the score over a period of time.
Apply for a Small Store Card
Getting a card with bad credit is more likely through smaller retail stores. They charge slightly higher rates of interest, but applying here is a good option to improve one’s credit score. Make it a point that you pay off the minimum monthly installments on time. 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 score.
Apply for a Co-Signed Credit Card
In case the other options are not feasible, you can choose to get this card with a friend, or a family member who has a good 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 them before. The relationship you share with them will work in your favor, when you apply for a card. There is no bank that will 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 have 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. Keep in mind that before issuing a card, the lender will not look only at your payment history; there are other parameters that can work in your favor, as well. A steady job, permanent residency, and a good debt-to-income ratio will help you get a card easily. Credit scores are not irreparable, and if treated properly, they can be repaired, and a high score can be maintained.