Obtaining Credit Card with Bad Credit

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It is not impossible to obtain a new credit card with bad credit, but it surely is difficult. You are not the only one in this position, considering the thousands of individuals who also suffer the effects of the recession, reflected in the high unemployment rate and revenue cuts. Bad credit is not always the consequence of the cardholder’s irresponsibility, and it does not reflect a character flaw. There are circumstances beyond the individual’s control that can reflect badly in their credit score and many well-meaning people end up struggling to get credit card with bad credit.

It’s no use sticking to the idea that no matter what you do, your credit card application is ignored when you have bad credit. Getting credit card with bad credit is achievable, even though it is true that less people can accomplish these nowadays due to the newly tougher standards for credit card risk management applied by the financial institutions.

Negotiating directly with the credit card issuer is one valid approach of the problem. Explaining the reasons for your blemished credit card history in the 100-word statement added to your credit report can increase your chances to be considered by the creditors. Not all customers managed to get into serious debt due to chaotic spending habits; many of them fell prey to financial difficulties due to illnesses or divorce, death of their spouse or accidents and card issuers consider these reasons valid during negotiating with potential clients, who try to obtain credit card with bad credit.

What to do to repair your credit

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Get a secured credit card to eliminate credit default. Secured credit cards are regular credit cards, except for the fact that, when applying for them, you have to make a deposit of minimum $300. The size of this deposit depends on the credit card issuer, but in almost all cases, your spending limit equals the deposit you made. If you fail to make the monthly payment on time, then the issuer will use the deposit instead. On the other hand, if you are on time with the payments, then you will manage to slowly improve your credit score, as secure credit card issuers make reports to major credit bureaus. Timely payments confirm your ability of handling your financial issues and they are a proof of your responsibility. In addition, these types of cards are safer to use for people in need of credit card with bad credit, and prevents them from overspending.

Prepaid cards are another good choice of getting credit card with bad credit. They are extremely convenient, as they don’t depend on a credit line, yet they still can help you rebuild your credit. Prepaid cards function on the principle that you get to spend only the amount of money you own. When the prepaid card runs out of money, the only way to reload it is by using your own money. You can either make transfers from your bank account, use e-banking protocols or post-office services.

Debit cards are similar to prepaid cards, as they take money only from your bank account. They also prevent overspending, as you have access only to money you actually own. Debit cards do not use borrowed money, on the contrary. If you make rare payments with your debit card, your account will actually be debited with a small interest rate. Of course, this interest rate is much smaller than the interest offered for average and long-term bank deposits, therefore debit cards should not be your first choice of making savings.

Unsecured credit credit cards, especially created for people in need of credit card with bad credit. When searching for additional options, these credit cards should be your last choice, as they are an easy way of getting even deeper into debt. Unsecured credit credit cards carry higher financial charges, including interest rates. There are many unsecured credit credit cards issuers, so when making your choice, you must consider several aspects:

  • Do not forget that the purpose of getting such a credit card is to repair your credit and the only means for you to do that is to resort to an issuer that reports to one of the major credit bureaus (Equifax, TransUnion or Experian);
  • Make comparisons among the offers of these credit card issuers, as their interest rates and other financial charges vary with the company; be aware of all possible options before making your mind;
  • Always make timely payments so that you attain your goal of rebuilding your bad credit.

How to get credit card with bad credit – steps

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  1. Use the connections you already have with credit card issuers or other financial institutions. Knowing your financial situation as well as your behavior regarding this issue, your bank or credit union might be persuaded to extend your credit or even give you pertinent financial advice;
  2. Always add the 100-word statement to your financial reports, being as honest as possible, in which you should explain that your bad credit situation is not due to irresponsibility or other factors that you could have easily controlled;
  3. Avoid unsecured credit cards and prefer those that only allow you to spend your own money, such as prepaid cards, debit cards, charge cards or secured credit cards. Only resort to these types of cards if your previous attempts at negotiating with your bank or credit union failed.