Having bad credit history is a disadvantage.
Lenders often give the best deals only for customers with good to excellent credit. People with bad credit may not get approved for credit cards that require good credit scores.
The question is, should you get a guaranteed approval credit card if you have poor credit? Consider the following points:
Not all guaranteed approval credit cards are the same.
Instant approval credit cards vary with regards to interest rates, fees and terms. Some card may have higher rates than others and some may have lower credit limit than others. In order to get a reasonable deal, one has to do comparison on each available bad credit credit card in the market.
Guaranteed approval cards can improve your credit.
Yes, credit cards with guaranteed approval can be tools for rebuilding bad credit. As long as you stay within your credit limit and you pay off your balances on time, you should be able to enjoy good credit again after a few months.
The interest rate isn’t the only fee on the card.
Of course you’ll want a credit card with a low rate but bear in mind that the interest rate isn’t everything. See to it that there are no unfair costs associated with your card especially when it comes to penalty fees and transaction costs. Also keep in mind that the interest rate is tied to your credit score. A high rate means you have a lower than average credit score. Make sure as you use this card that you use it wisely. Only purchase what is necessary. Make it a point to be able to quickly pay off the balance.
Not all guaranteed approval credit cards report to the major credit bureaus.
To be able to rebuild your bad credit history, you need a card that regularly reports your payments to the major credit bureaus. Unless your payments are reported, there will be no improvement in your credit report. Remember that not all credit cards for bad credit has this provision so you’ll want to check it out before signing up for any card.
Owning a guaranteed approval credit card is just the first step.
After obtaining a bad credit credit card, the next step is to stick with your payment schedule. How quickly you improve your credit rating will largely depend on your payment habits.
Pay off your new credit card balances in full.
The best way to manage a credit card- whether it’s a standard card or a bad credit credit card- is to pay off balances in full each billing period. This is the safest way to avoid bad debt.
Never underestimate the value of reading your contract.
Reading and understand the Terms & Conditions of your chosen credit card is a crucial step that must never be taken for granted. Even if you’ve read the online reviews, you still need to take time reading the fine print. Don’t just scan the Agreement. Pay attention to each and every statement included in it. If there are statements that seem “vague” or unclear, do not hesitate to call up your issuer for explanation.