Low credit scores can prevent consumers from obtaining loans and making major purchases. Anyone who finds themselves in this situation knows it is tough. You have likely already taken out a bad credit loan and know how much better your life would be with a higher credit score.
Luckily, there are avenues that can be taken to improve FICO scores and transform a credit portfolio into a great one. There are credit cards for people with bad credit available.
Finding the right card can make all the difference. Here at Bonsai Finance, we strive to give everyone the opportunity to advance their score and position themselves to have the best scores with time. We certainly can help those looking for credit cards for bad credit.
Credit Cards For Bad Credit
Bad credit severely limits a person from certain opportunities out there. In general, higher interest rates can be expected when approved. However, this should never be a hindrance when rebuilding credit portfolios.
Credit cards for bad credit can help get a consumer to where they need to be. The terms and guidelines are going to vary from card to card. We can find the right credit cards for bad credit to fit any individual needs.
One choice to consider is obtaining credit cards for bad credit that do not have a credit check. These work much like no credit check loans, where the lender primarily takes into account your income and ability to pay back the loan.
Another option is a secured credit card which uses a pre-loaded capital to secure your line of credit. These are your main choices for credit cards for bad credit.
Cards With No Credit Check
Poor credit numbers are 580 or lower. Most in this category have a hard time climbing out of that hole. Thankfully, there are ways to get right again. Credit cards for bad credit are good for consumers who don’t have a bank. A bank account number is not needed. Instead, payments can be made with money orders or even a second-party debit card. The approval process is easier also. While there is no credit check, there are still certain income requirements that need to be met.
Typically, a substantial deposit is needed to open the card. The minimum amount is around $200. Once the initial deposit is made, however, quick credit repair can be expected. With on-time payments, a jump in credit rating can be expected by 6 months of correct use.
We are now going to take a deeper look into another credit card for bad credit in the form of a secured credit card.
What Is A Secured Credit Card?
A secured credit card is often used for rebuilding credit. A cash deposit is needed to activate the card. This is used as a collateral should anything happen. The money also becomes the credit line. So, if $200 is put in as a deposit, purchases can be made up to that amount.
Over time, a bank typically rewards the consumer for on-time payments. More money can be added to increase credit limits, or the limit can be increased without any additional money added to the account. This is a great motivational feature for those who require a credit card for bad credit.
Obtaining A Secured Credit Card
In addition to the cash deposit, there are a few other characteristics to know about. First, obtaining a secured card is not difficult. Knowing where to go to get one is key. We can help find one that can fit any requirement.
Using A Secured Credit Card
Knowing how to use a secured card is important when trying to rebuild credit. The most vital piece of information to remember is making on-time payments. Buy a couple things every month and pay that money back immediately. There should be no balance carried from month to month.
Secured credit cards weren’t meant to be used forever. Instead, the purpose for them is to be used just long enough to repair a bad credit situation. As state previously, these cards carry higher interest rates and fees. The fees typically have to be paid annually while the credit card is open and in use.
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Credit Score Loan Size/Amount Loan Term APR Origination Fee All can apply $100 - $15,000 1 - 60 4.99% - 1,386% Varies by lenderCredit ScoreAll can applyLoan Size/Amount$100 - $15,000Loan Term1 - 60APR4.99% - 1,386%Origination FeeVaries by lenderOur take: Online marketplace that searches through lenders to find the best offer for your personal situationShow more
Benefits Of A Secured Card
A secured credit card reports to the three major credit bureaus. This is an important feature to note. As the credit companies see on-time payments being made, this is also going to directly impact FICO scores. As long as it is used correctly, this tool is of huge value when fixing credit numbers. After multiple on-time payments are made, traditional credit card companies are going to see there is less risk involved if someone in this situation is looking to borrow from them.
There are other options available when looking at credit cards for people with bad credit. We are going to take a look at them now.
Credit Cards For People With Bad Credit
When credit scores hover around 580 to 619, consumers are determined to have bad credit. While the score is not as bad as a poor score, it is still very limiting when looking at credit options. Therefore, knowing what is out there is beneficial when trying to increase credit scores. In general, there are routes that can be taken to obtain more credit. These credit cards for bad credit are highlighted below.
Using A Secured Card
If qualifications are met, a secured card can also be used for those who have bad credit. Although the credit score of consumers with bad credit are higher than those with bad credit, it may still be hard to get approved for anything else.
The same features and requirements that were mentioned previously need to be met here as well. There may be more credit card options available, and we can help do the proper research. A credit card for bad credit that is secured is a great way to fix credit numbers.
Another form of credit card may also be an option when bad credit plays a role.
Credit Card For Bad Credit
Unsecured credit cards are available to those with credit issues. Unsecured credit cards are traditional credit cards. They are also the most commonly used out of all cards. No deposit or collateral is needed when requesting one. There is no money that a creditor can take should a default happen. Instead, the credit card issuer must take different means to recoup the money. Collections, reporting the delinquency to credit bureaus, and even lawsuits are possibilities. Keep this in mind when considering using an unsecured card.
Note that when a consumer has bad credit, the option to use any unsecured credit card is not applicable. Instead, an unsecured card made for bad credit consumers is going to be the best choice to help the situation.
Benefits Of An Unsecured Credit Card
There are still good benefits to be had when using an unsecured credit card. Of course, the credit bureaus are notified when payments are made. On-time payments are always necessary to increase scores. When a reputation for making on-time payments is met, an increase in credit limits can occur without any further approvals. Depending on the lender, the dollar amount can vary from a few hundred to even thousands of dollars.
Another key benefit is the lower approval requirements. Since unsecured credits cards made specifically for bad credit are meant for rebuilding, strict approval conditions are not needed. With the looser guidelines, it makes it an excellent opportunity to obtain a card without an additional deposit like a secured credit card does.
Things To Remember When Using An Unsecured Credit Card For Bad Credit
Before requesting an unsecured credit card, knowledge of the APR, annual fee, and any other fees are necessary. Although an unsecured card doesn’t require collateral, there are still some strings attached.
For one, the cards usually have significantly higher APR rates than those unsecured cards for average to high credit scores. This can range from 10 to 20 percent higher than those traditional cards. This means, if a balance is carried from one month to another, a high-interest card can yield high charges. This type of credit card for bad credit needs to be used wisely.
Credit cards for people with bad credit are often used to establish and rebuild credit portfolios. We at Bonsai Finance are well versed in all opportunities that are available for the struggling credit consumer. Fixing a credit score doesn’t have to be tough. In fact, as you can see, there are several ways to repair a poor or bad FICO score fairly quickly. Take advantage of what is available and being offered. Using these methods sensibly is vital for credit score growth.
Selecting an Optimal Credit Card for Bad Credit
Once you understand the basics of how credit cards offered to bad credit applicants work, you need to start thinking about how to select the credit card offering that’s the right fit for you.
Your first choice will be between a secured versus an unsecured card. A secured card requires you submit a security deposit, which could be in the hundreds of dollars range. But an unsecured card might have an annual fee, higher interest, or another factor that makes submitting your security deposit preferable by comparison.
If your card requires a refundable deposit, you’ll also want to verify how long before it’s returned to you and under what conditions. You can likely find cards that return your deposit starting at 8 months from the date of issue, given no late payments – or you might even get your money back a little sooner (as a credit to your card, most likely, rather than as a cash-able check.)
If you go with a secured card, look for a credit card company that allows a larger credit line relative to the deposit size and that will let you upgrade to an unsecured card after so many months or years of responsible use. You may even consider taking out a personal loan with no credit check to secure the card to start with.
If you decide on an unsecured card, look for credit card issuers who offer a lower APR, lower fees, no annual fee if possible, and as high a credit line as you can get. Comparing your options through Bonsai Finance will put you in a position to know which card offer is best so you don’t miss out on a great offer simply because you didn’t know about it.
Other Less Thought Of Factors to Consider
Besides weighing the various factors more directly impacting your card and how you’ll be able to use it, there are also a few less thought of issues to take into consideration.
What kind of fraud protection does the card come with? Is there a limit, or would you have to pay a certain percentage? If the cardholder receives compensation after a fraud event, that’s important – but also be sure you understand how such compensation may impact your credit score and credit limit going forward.
Does the card offer come with free online access to your account? That’s basic, and it’s hard to manage your account and pay your bills without it these days when so few rely on “snail mail.”
Also, be sure to check the advertiser disclosure when you read a card offer. And if you visit their website, you may even want to give a quick glance to the “our cookies policy” section if you don’t want to get hit with a lot of ads later on.
Consider How You Plan to Use Your Card
Finally, everyone’s ideal card is not the same. It not only depends on which offers you qualify for but also on how and where you plan to use your new credit card.
If you will travel internationally or order products from overseas with any degree of frequency, you should be sure to get a card with no foreign transaction fee, or at least as low a foreign transaction fee as possible.
If you plan to pay all or most of your bills with the card and to roll most of your monthly expenses through it, paying it off in full each month, then you have to add up those expenses and ensure you’ll have a sufficient credit line.
And if you’re going to want to use your credit card for emergency cash withdrawals on occasion, look for a card with the lowest cash withdrawal fee.
At Bonsai Finance, we can help you compare and contrast large numbers of credit card offers that even those with bad credit can get approved for. We can help you find a card that will contain all the features most important to you so you can use your card with the greatest possible convenience.