Bad credit can be a major hassle to deal with. Without positive credit on your report, it’s difficult to get a credit card, rent an apartment or do anything else that could potentially help your score. What’s a person with poor credit to do?
Getting Started: The First Steps to Credit Repair
It’s important to gain an understanding of how credit works before you worry about improving it. If you’ve been told that your score is bad or been denied an application because of your credit, your next step is to obtain a free copy of your credit report. Federal law allows you to get a free copy of your credit report each year, and many websites offer this service.
Looking over your credit report will do more than show you your score. It will also help you see why you have bad credit in the first place. Do you have bills in collections? Did you have a utility payment that you forgot to take care of? Sometimes these things happen without your knowledge, and if you didn’t check your report, you might never find out about them. Additionally, checking your credit report regularly can help protect against fraud. If you see something fishy, you’ll have the chance to get it taken care of.
Applying for Cards: The Next Step
Now that you know your credit score, your next step is to apply for a credit card. This is where things get tricky. If you’ve already been denied for a major credit card in the past, you might think this is impossible, but you just need to know where to look.
This should be your first stop when seeking options for building your credit. A bank or credit union will have a previously established relationship with you. If they have an idea of your financial habits, they might be willing to take a chance on providing you with a card despite your poor credit.
- Sub-prime Credit Cards
These are special cards designed specifically for people with poor credit. They can be quite useful, but if you’re not financially responsible, it’s possible that having one could plunge you down into even worse credit. The interest rates and fees can be hefty. If you choose this option, be sure to commit to paying the balance in full every month and staying on top of any fees.
- Secured Credit Cards
This is a slightly safer option for those with poor credit who worry they might not be capable of full financially responsibility. They allow you to make a deposit of a given amount to serve as a credit limit. You’ll then use the card as you would a normal credit card, but the difference will be that you won’t be able to go over that limit. This will help you learn better financial habits while protecting yourself from going too far. If you choose this option, be sure to contact your credit card company to make sure they will report your transactions to the credit bureaus.
Card Suggestions: Two Secured Cards for Bad Credit
Digital Federal Credit Union Visa® Platinum Secured Credit Card
This is a great secured credit card with no annual fee and a relatively low interest rate. You’ll need to join the credit union to qualify, but all it takes is a donation to a qualifying charity. This company reports to the major credit bureaus, so using this card will help improve your score.
Capital One® Secured Mastercard®
The benefit of this card is that you can choose your credit limit by making a deposit of $49, $99 or $200. If you’re low on money but want to get started working on your credit right away, you can sign up now and pay your deposit over time. There’s no annual fee for this card, so you won’t have to worry about hidden costs.
For more information on improving your credit score or finding credit cards for those with poor credit, please contact us today.