If you've got bad credit, it probably got that way by not paying your bills on time.
So the last thing you want to do make matters worse for yourself. You need to learn to manage your money and pay your bills when they are due.
The key is to start small. Don't try for a card with a $10,000 limit. First of all no one will give you one and second of all, even if they did, you probably wouldn't be able to handle it and before long you would find yourself in even more debt ($10,000 more?).
If you have bad credit it will be difficult to get a credit card, any credit card, but major credit cards that offer rewards will definitely be way out of your league. The idea is to start small and work your way up. You need to prove to the card companies that you are responsible and pay your bills on time.
So the key is to get a card that will give you a $500 credit limit and practice not running a balance. Pay it off every month religiously. NEVER, never, never charge more than you can pay in full when the balance comes due. As you practice this, you will begin to learn good habits and begin to improve your credit rating. Plus paying the balance in full will look good on your credit report.
Many people believe that they need to have a debt balance in order to improve their credit rating. But this is not true. This is kind of like thinking you need to talk to an alcoholic about how to hold your liquor. The truth is that what the banks are looking for is a record of making your payments on time and your debt to credit ratio (also known as credit utilization score). If you have less than 30% of your credit limit used, banks will realize that you are not in over your head and aren't maxing out every credit card you have. (The sure sign of someone with a spending problem).
The issue now is how do you find a credit card company that will even give you a $500 credit line? Well, First Premier Bank and bad credit are synonymous so you might be able to get a card from them but their fees are very high and having them appear on your credit report may not do you much good. It is kind of like hanging out in a bad neighborhood, it doesn't do much for your reputation.
An unsecured Visa/MC will require that you have at least "fair credit" So you need to know how bad your credit actually is. You can request a free copy of your credit report once a year from each of the three credit reporting agencies. Some people recommend that you request all three at once but if you are in the process of improving your credit you could just request one since they should be very similar. Spend a few months working on your credit and then request one from another agency and see if there is any improvement. By studying these reports you will begin to learn what the companies are looking for and how to improve your score.
How Bad is Your Credit, Really?
If it’s really bad like charged-off accounts or recent bankruptcy then you will have no choice but start with a secured credit card. But if your credit isn’t “ really bad” but isn't “good” then you might be able to get approved for a no-frills unsecured account, which would be preferable. Remember, if your credit isn't "Good" the interest rates on the card are higher as well, so you definitely don't want to run a balance. Also be sure to check the annual fees, and other fees because they may be extremely high. One First Premier Card charges 36% interest, a $95 one time processing fee, $75 annual fee (first year) and $45/yr every year after, plus $35 for a late payment or bounced check. That is not a way to get your finances in order!
At the time of this writing one of the Capital One Secured MasterCard charges 22.9% interest on your balance (still high but much better) and a $29 annual fee, $0 Application Fee, $0 over limit fee, $19 Late Fee, $35 bounced check fee and all they require is that your income be greater than your rent or mortgage. It also has a credit limit from $200 - $3,000 with a $49, $99 or $200 refundable deposit based on your creditworthiness. It even gives you free access to track your credit score and other tools. But terms do change so be sure to verify the terms before applying.
Even if you have bad or no credit, you may still be able to get one of these credit cards. Some of the cards are pre-paid so they work much like a debit card but may report to credit agencies to help build your credit. Others are "Secured" meaning if you deposit $500 with the card your credit limit will be $500. Both of these types of cards have higher fees but will allow you to rebuild your credit rating if you watch them closely and pay your bills on time every time.
Disclaimer:* See the online application for more information about the terms and conditions for these credit card offers. Every sound attempt has been made to preserve precise information. However all credit card information is presented without guarantee. After clicking on the offer you desire you will be taken to the credit card issuer's web site where you can review the terms and conditions for your selected offer.
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