Low credit scores can prevent consumers from obtaining loans and making major purchases. Anyone who finds themselves in this situation knows it is tough.
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 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 Poor Credit
Poor 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 poor 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. Another option is a secured credit card. These are you 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 or poor 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 poor 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 poor 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.
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 poor 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 are 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.