“We tend to think of money problems as a character flaw,” says Geoff Williams, co-author of “Living Well with Bad Credit.”
Bad credit can make you ineligible for the very best credit cards. The best credit cards are the ones which offer low rate of interest and high limits. But even if you have bad credit, it is possible to secure a credit card. Before we delve into the subject you should know what credit score is.
What is Credit Score?
A credit score is a three-digit number between 300 and 850 derived from an analysis of your credit report. Lower scores denote higher risk, resulting in either a decline from creditors or much less favorable terms. There are three major credit bureaus- TransUnion, Experian and Equifax.
Prepaid Credit Cards
Basically, a prepaid card is a Master Card or Visa that the user preloads with cash. You can obtain a credit card without credit or with bad credit, which is called the prepaid card. Just like a regular card, you can use this card anywhere where Master Card or Visa Card is accepted. However problem with the prepaid cards is that they do not report to credit reporting agencies. This can hamper your credit report and history
Secured Credit Cards
Another popular method of obtaining a credit card with poor credit is by applying for a secured credit card. Secured cards are issued by most major banks. The cardholder is required to open a bank account or Certificate of Deposit with the bank, generally for an amount between $350 and $10,000. The concerned bank then issues a credit card with a credit line matching the deposit. Hence the term secured. Here the card is secured by the deposit. Therefore if the bill is not paid on time, the concerned bank will use the deposit to clear the bill. An advantage of secured credit cards is that, the credit history will be reported to the three bureaus. This will help you to repair the credit score.
Establishing a good credit history is vital. If you have had a poor credit report in the past, there are still options for obtaining a credit card. However, it is always better to maintain a good credit report.
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