There are a lot of bad credit credit cards on the market. Some are secured (requiring a security deposit) and some are unsecured. Both are great ways to rebuild credit. This article will focus on using Bad credit credit cards (unsecured) as a way to start rebuilding credit.
Credit cards are the easiest way to rebuild credit. But for a long time, if you had bad credit, you were severally limited in the choices you had. But now there are a lot of banks that have started to offer financing to people with bad credit. But while bad credit cards can be the means of getting your credit score back on track, they can be a double-edged sword. While these cards are very easy to qualify for, it still takes some sound financial management to make these cards not only useful ways to pay but to help rebuild your credit.
Some tips for successfully using bad credit credit cards (unsecured) to rebuild your credit
- Reports to credit bureaus. If your focus is to rebuild your credit, make sure your bad credit credit card reports to at least 1 credit bureau. But its easy to find one that reports to all 3. Lately, I’ve seen the guaranteed approval credit cards may only report to 1 credit bureau. Thes cards are for people who just cant’ get a regular credit card because their credit score is just too low.
- Read the fine print. Nor all bad credit credit cards (unsecured) are the same. They will all have different rates and fees. They also have different credit score requirements. You should know what your credit score is before you start looking for a new credit card, Some bad credit cards will go as low as a 540 credit score. While some will require a higher credit score in the mid 600s.
- Get the “top tier” card based on your credit score. The higher your credit score the better the rates and fees you will qualify for, Don’t settle for just any bad credit card.
- Get a high credit limit. You want to try to get a high credit limit. Most of these unsecured bad credit credit cards will give you a credit limit of $300 – $500. Don’t be satisfied with that. If you have been working on your credit and it’s pretty clean. Call the credit card company. Ask them for a credit limit increase and get it moved up to $1500 or as much as they are willing to give you!
- Know what fees will be charged and how. Understand that all bad credit cards (unsecured) will come with a fee. What they do is let us say the fee is $200, and they give you a line of credit of $500. When you get the credit card your available credit will be $300. The $200 fee will already show up as a charge on your credit card and you can pay it over time. That’s why sometimes it’s better to wait, save your money and get a secured credit card. Your deposit is your credit limit and you get it back after a year or 2 of on time payments. But if you don’t have time to save up for the secured credit card, then taking out one of the unsecured credit cards for bad credit will help you build credit also.
- Improve your credit score. If you haven’t taken the time to start fixing your credit. Don’t ask for the credit limit increase. You will just be turned down. Wait a few months and get your credit in order. These cards are meant to help you. So you don’t have to worry about the initial credit review. But to get the credit line increased, you have to show the bank that you are not a big risk. So take the time to start reading thru this site. We give a lot of free tips on how to rebuild your credit. Or feel free to use one of professional credit repair companies.
- Don’t max out your credit limit. You always want to make sure you are only using 30% of your available credit limit across all your cards. So if you have only 1 bad credit credit card, you should make sure you never leave more than a $90 balance on the card. That’s why it’s important to get as high a credit limit as possible. Now if you have several unsecured credit cards you take the total amount of your credit limits and stay under 30% of that.
When choosing a credit card, you have to make sure you pick the right one. There are a lot of bad credit credit cards on the market. You should choose one that fits your current credit status. Read the fine print. If you have a credit score below a 600. Expect to pay higher fees and interest. If your score is below 600, look at cards that guarantee approval. If you are closer to 640 – 650, look into finding unsecured credit cards for people with FAIR credit. Your score is a bit better than what is considered “bad credit”. These cards will have cheaper rates and fees. Remember that every time you apply for a credit card your score will go down a little if the bank is using a hard inquiry. If your credit score is already low, you don’t want to “shop” your application. Read the fine prints, look for reviews and then choose the credit card that is right for you!