Having bad credit is a burden. There’s no doubt about that. A bad credit score can set you back financially and make it much harder to manage important aspects of your day to day life. But that does not mean it’s a lost cause. We’re here to tell you that no matter what hurdles life has thrown your way, there’s still hope for your credit score. The first step is finding the right credit card that will work for and not against you.
When burdened with bad credit, or none at all, it’s often hard to get approved for a new credit card. However, you need that new card in order to start building up your credit history. If you are looking to put a stop to this all too common cycle, then take a look at these credit card options designed to help get your credit score back in shape.
Secured Credit Cards
A secured credit card allows you to hand in a deposit that will serve as your available credit line as well as collateral for future payments. The required deposit is usually set at a minimum of $200 and as long as you stick to your payments, it will be reimbursed once you close or upgrade your account.
You can use a secured credit card to make purchases up to the limit set by your initial deposit. Just like any other credit card, you are then responsible for making timely payments to square off your balance each month. Making these payments on time and successfully managing your account will help you improve your credit score and will eventually qualify you for a regular credit card.
If you fail to pay your bill, then the deposit will be used as payment, acting as a safety net and reducing the risk. Failure to pay will also result in incurred interest, however, the balance will never exceed the deposit. Think of it as the training wheels of credit cards. Even if you falter, the deposit will always be there to maintain balance.
Subprime Credit Cards
Although they tend to carry higher interest rates, when used responsibly, subprime credit cards are another useful tool that can help you improve your credit.
Just as the name infers, a subprime credit card is designed for cardholders with less-than-prime credit scores or minimal credit history. Those who qualify must be able to absorb the higher costs affiliated with this type of credit card, set in place to offset the increased risk taken on by the lender.
Although high-interest rates, which can exceed 30 percent, as well as other account fees often apply, this is the trade-off for the chance to slowly rebuild your credit score. As long as the credit card holder regularly pays their bills on time, then the subprime credit card will help them get on the right track again.
Unsecured Credit Cards for Bad Credit
Those who graduate from a secured credit card can then qualify to have an unsecured one designed for those with bad credit. Similar to the subprime credit cards, this option does not involve a deposit, however, tends to have high-interest rates and annual fees.
Although the unsecured cards for bad credit for the most part mirror the subprime credit cards, this option is often offered to people who started out with secured credit cards.
Once you have managed to improve your credit enough, you can then quality for better credit card options which will likely involve fewer fees and more rewards.
Retail Credit Cards
Another option for those unable to qualify for an unsecured credit card is to apply for retail credit cards, offered by numerous retail stores big and small.
These cards can generally only be used in specific stores and tend to have low credit limits. However, when used responsibly, retail credit cards can be a great tool in improving your credit score.
Like the subprime and unsecured credit cards for bad credit, retail credit cards tend to have high-interest rates. However, as long as you commit to timely payments, they can be utilized as a smart tool to boost that credit score.
Do Your Research
Now that you have been introduced to the various options put in place to help rebuild your credit score, the next step is to find out which card is best for your individual situation. No matter what bind you might be in, know that there is a solution waiting for you. All you need to do is search online.
A big step in your credit score rehabilitation journey is to do your research. It’s important to compare different cards and understand what each lender is offering. This includes comparing reward programs, required qualifications, new cardholder deals, interest rates, other potential fees, and more.
Luckily all these details are available online and all you have to do is search and compare. In addition, there are also free services which provide plenty of helpful information and assistance choosing what card is right for you. With all the needed information just a few clicks away, you can easily get back on track to getting your credit score up and climbing.