Did you know that a bad credit score can affect your ability to rent an apartment? Or, that it can mean you pay higher utility deposits and auto insurance rates? Although raising your credit score may feel insurmountable right now, gas cards for bad credit can get the ball rolling.
To ramp up your credit score, you need to reduce your credit utilization percentage, pay your bills on time, and have an established credit history. But what if you can’t qualify for a major credit card at all?
Read on to learn more about how gas credit cards can help you raise your score and get back in the financial game.
Why Credit Scores Matter
Many American don’t fully understand the implications of their credit score. Yet, these numbers (because there’s more than one) define you in the eyes of many agencies and organizations.
These definitions stretch well beyond finances, too. According to Forbes, “Your credit score is basically a responsibility and trustworthiness score.”
What does your current credit score say about you? A score that falls anywhere below 500 basically closes most doors to you. It means added expenses and fees, too.
Even scores ranging between 500 and 600 points generally result in a no from lenders and higher deposit fees from landlords and utility companies. From 600 to 700, it looks like you’re trying to get your act together but definitely have a ways to go.
By the time you get to 700-800, your credit looks good, and you get approved for most cards. Above 800, the lending world will generally give you what you want. But how do you get there when your credit’s so abysmal that you can’t even get approved for one card?
Let’s delve more into how credit scores work and what you need to do to become an 800+ scoring golden child.
Credit Scores 101
About 25 percent of Americans believe that we each get one credit score. Although we tend to refer to this score in the singular, the truth is we have many different credit ratings.
Why? Because the various credit bureaus calculate their scores differently. What’s more, scoring models vary depending on different types of loans for cars, mortgages, and more.
While many Americans believe their credit score is listed on their credit report, that is not the case. FICO remains the dominant scoring model, and you can check it from TransUnion, Experian, or Equifax. Visit MyFICO.com to purchase a copy for $20, or check out free ways to get a copy of your score.
What Your Score Means
Your score will fall between 300 and 850 points with 850 being the highest. Once you know what your credit score is, check your credit report at AnnualCreditReport.com.
Look for any errors that may be affecting your credit score and dispute them. Once your disputes are resolved, check your score again.
Contact past creditors to arrange payments if you have debts to settle. Then, make sure you make all future payments on time. Check in frequently with your credit report to see how these efforts are raising your score.
Now that we’ve gone over the basics when it comes to credit scores, let’s take a look at how gas cards can help you raise yours.
Gas Credit Cards & Your Score
When you’re trying to raise your credit score, it can feel like an impossible challenge. This holds especially true if you can’t qualify for any major credit cards.
Fortunately, maintaining a gas card can help you close the gap between your current score and an excellent rating.
First and foremost, gas cards make more sense than department store cards.
Why? Gas represents a necessity rather than a discretionary purchase that you’d make at a department store.
Second, gas cards approve consumers with lower credit scores than major credit cards. Yet, most still report to credit bureaus. That means you can build a positive credit score despite being shut out by big-name credit card companies.
Third, depending on the card you go with, you may even get a small discount for each gallon of fuel charged. These added discounts come in handy. But watch out for higher interest rates associated with many of these cards.
Fourth, some gas station cards go the extra mile by being associated with major credit card networks such as MasterCard or Visa. You can use these cards anywhere. But you need good credit to secure these.
Finally, some cards associated with major credit cards offer extra rewards points for gas purchases. Again, these require higher credit scores than the other cards discussed above. They may not be the right option for you right now, but you can keep one in mind for a later date after you’ve raised your score and can qualify.
Credit inquiries can negatively impact your score, especially when they start to add up. So, before you go crazy applying for gas cards, do some research. Then, apply for no more than one card at a time.
Remember when we said that most gas credit card companies report to the three major credit bureaus? While this holds true, they’re not required by law. So, double check that the card you’re considering does this reporting as well as how often.
An essential aspect of building your credit score is using your new gas card regularly and then paying it off. So, make sure you opt for a card from a trusted brand that you visit regularly. Convenience is crucial to using your card and improving your credit.
Since 15 percent of your FICO score is based on the length you’ve had credit, it’s important that you open an account and keep it that way. Once you’ve improved your credit score and can open other accounts, don’t assume that gives you the green light to close your gas credit card account.
Start Building Your Score
Once you’ve opened a gas credit card, follow these basic best practices to start building your score. Above all else, it’s crucial that you remember interest on gas credit cards tends to be high.
So, you need to make a commitment to pay off your balance every single month on time. According to FICO, making on-time payments determines 35 percent of your overall credit score.
Among the best credit cards for gas for those just starting to rebuild their credit remain the cards that aren’t co-branded with any major credit cards. These are amongst the easiest to secure even with a low credit score. What’s more, they have lower limits, which will prevent your balance from growing out of control.
Credit Utilization Matters
You need to keep your credit utilization percentage in mind, especially for cards with low balances. The amount owed on your revolving credit makes up 30 percent of your FICO score. So, if you’re maxing out your credit card each month, you’re not doing your score any favors.
According to the experts, it’s best to keep your credit utilization percentage as low as possible. Ideally, it should fall between 10 and 30 percent of your available credit. For cards with a low balance, the credit card utilization percentage can go up quicker than you may realize.
According to Forbes, “Owing money on credit accounts doesn’t necessarily mean you’re a high-risk borrower. However, when a high percentage of a person’s available credit is used, this can indicate that a person is overextended and is more likely to make late or missed payments.”
So, keep tabs on your credit utilization amount. And make sure that you pay your balance off each month.
You can even make weekly payments on your card. Just make sure that you’ve got no more than a $150 balance for each $500 of credit.
Best Credit Card for Gas
Now that you’ve got a better idea of how to improve your credit score and why a gas card can help, let’s take a look at some of the best credit cards for gas.
First, the Credit One Bank Cash Back Rewards Credit Card provides value and versatility. Since it’s not branded, you can use it at any gas station across the country. On all purchases, you receive one percent cash back rewards.
It boasts no annual fee, a competitive APR, and $0 fraud liability so that you’re never caught holding the bag if someone steals your identity. That said, it requires good credit, so this may be a card that you work up to over time.
Second, the Credit One Bank Platinum Visa offers many of the same benefits of the Credit One Bank Cash Back Rewards card, but it only requires fair credit for approval. It also allows you to view your Experian credit score for free online.
Third, the Credit One Bank Platinum Visa with Cash Back Rewards provides qualified applicants with a one percent cash back reward on all purchases. It boasts no annual fees, and it’s available to those with fair credit.
Like some of the other cards on this list, it comes with complimentary credit monitoring. It offers zero fraud liability, and it boasts the Credit One Bank mobile app, which allows you to manage all of your financial accounts from one spot.
If you need a card that rebuilds credit, and you’re starting from the bottom, give the Credit One Bank Platinum Visa a look. You can pre-qualify without harming your credit, and it lets you track your Experian score for free. This card reports to the major credit bureaus each month, so it represents an excellent tool for rebuilding damaged credit.
Each time a credit line increase opportunity comes up, your account will be automatically reviewed for eligibility. Best of all, the card approves those with bad credit.
Your Tool for Improved Credit
Many Americans don’t understand how their credit score defines them. In fact, a significant percentage don’t even know what their credit score is. But you can’t hide this score from loan officers, mortgage lenders, or potential landlords.
Heck, employers are even using credit scores to get a better idea of which candidate to hire. It may not seem fair, but credit scores have become the new yardstick for measuring how responsible and trustworthy a person is. Instead, of battling upstream against the current, it’s time to get your finances in order.
A gas credit card can help you do this. But it takes time, patience, and consistency before you see results.
That said, if you follow the best practices outlined in this article, within about a year’s time you’ll start to see improvements. This marks a great time to check your credit score again and apply for a new card as appropriate.
Remember, though, that it’s important to keep the gas card account that you already have open. The length of time that you’ve held revolving credit remains an important factor to your score.
Gas Cards for Bad Credit
When it’s all said and done, the recipe for good credit proves simpler than you think. But it requires consistent score monitoring, responsible stewardship of your finances, and a thorough understanding of how scoring works.
Keep in mind these crucial variables to your FICO score:
- length of time you’ve had your longest credit account open
- credit utilization
- on-time payments
By grasping these principles and putting them into use, you’ll be amazed at how your credit score changes over time. Do some research into gas cards for bad credit and then apply for the card that:
1) you’re most likely to be approved for
2) will offer the best benefits for rebuilding your credit.
Finding the best credit card to rebuild your score requires time and research. But the payoff makes it well worth it.
Interested in learning more about gas cards for bad credit? Or, maybe you face other monetary challenges that are keeping you from fulfilling your financial potential?
At Bonsai Finance, we understand that personal finance can feel confusing. Our goal is to provide you with the best resources to navigate this complicated world. We want you to come away with more money lining your pocket and nest.
Follow our blog to stay on top of the best advice for financial success. We’re here to bring “clarity to an increasingly confusing personal finance world.”