How To Get A Credit Card With Worse Than Bad Credit

Some people may find it hard to understand why a credit card company should agree to issue a card to someone with a poor credit score, since they assume that everyone in this situation is a delinquent who never pays their debts. Of course, this is far from true and most of those with bad credit records have just been unlucky. They may have lost their job as a result of illness or redundancy, or following a divorce. The card companies are well aware of this and so provide a number of different schemes for this group of people. The schemes comprise three types of cards, prepaid, secured and unsecured.

Prepaid credit cards are a misnomer because they do not use any credit. To acquire one of these cards you have to deposit money with the card company. The amount of your deposit will be your credit limit, so, when you use the card, you will just be spending your own money in the same way as with a debit card. Disadvantages of a prepaid credit card are that it will not usually be accepted for hotel bookings or auto rental. Nor will the card company report to the credit bureaus, so it will not help to rebuild your credit rating.

Secured credit cards also require you to pay a deposit when you apply, but this is held by the card company as security. Apart from the deposit which sets your credit limit, a secured credit card is the same as any other credit card. No credit checks are required for this card either, but the card companies do report to the credit bureaus, so this will help to repair your credit rating. Provided you are in good standing and have made all your payments on time many card companies will transfer you to an unsecured card. On the other hand your deposit will cover any default.

Unsecured credit cards for people in the bad credit category attract a higher interest rate and additional fees, but otherwise are the same as regular cards. You can expect a setup fee of anywhere between $50 - $100 together with an annual charge as well. It's generally easy enough to obtain a card with a credit limit of $400/$500 which can be raised once a satisfactory payment record has been established. Reporting to the credit bureaus is standard practice for these cards so will help your credit repair.   

Someone who has had a credit card application refused because of bad credit can chose from the three types of card, all of which are offered by a number of companies. Which of the three types is appropriate will depend on each individual's circumstances. Because the costs and conditions of the card companies vary wildly, it pays to check the details of each offer with great care before making a decision.