Credit card issuers take a look at a consumer’s credit before issuing them a credit card. They do this to determine how likely the person is to make the payments. Generally, individuals with good credit get the best interest rates and the largest credit lines. If a person has bad credit they may have a difficult time qualifying for a credit card, and even if they do the interest rates are very high. But there is hope for those with bad credit to improve their scores and qualify for better credit card opportunities.
The best way to rebuild bad credit is to open a secured credit card account. Before opening any type of account, you want to check your credit score. This will give you a starting point as to which type of credit card you may be eligible for and how long you will need to keep the secured credit card open. If your credit score is between 500 and 600, applying for a secured credit card will most likely be your best bet.
If you do need a secured credit card, analyze the fees, rates, and other caveats before signing up. Also ensure that the issuer is accountable to the credit bureaus. Once you’ve decided on a credit card, tuck some money away as most require some type of cash deposit. The money is held as collateral in case you default on the account. Once the account is closed out, the money is returned.
Things to Look Out For
Secured credit cards often come with a lot of fees. Some are fair like balance transfer fees and cash advance fees. Others are excessive like maintenance fees and should be avoided if possible. Before signing any contracts, make sure you understand the late payment policy. Some card companies punish late payments by charging outlandish interest rates. Most importantly, ensure that your secured credit card company reports to all 3 major credit bureaus. You’ve worked too hard to not have your progress show up on file. Once your credit score is between 650 and 720, you will be eligible for credit cards with fair rates. If you are approved by a regular card, close the secured credit card account and get your deposit back.
Some consumers seek the help of a bad credit merchant to help them find and acquire secured credit cards, or to give them advice on fixing their credit. These companies are in high demand, but need competent payment processing to accept debit and credit payments from consumers. eMerchantBroker.com is the number one processor for bad credit merchant accounts everywhere and will help expand bad credit service profits.