How to Get a Credit Card with Bad Credit
Applying for Cards when an Applicant has an Adverse Credit History
Sep 12, 2009
If an individual has a bad credit history, it can be hard to get a credit card but it is not impossible. There are deals available although they may come with a higher than usual annual percentage rate.
How Do Lenders Assess a Credit?
Lenders will look at a person's credit history and their score in order to determine whether or not the individual is a risk.
Few lenders will extend credit to a borrower who has declared bankruptcy or who has other serious problems such as county court judgments against him or her or defaults on a loan. Missing payments on a personal loan, credit card or mortgage arrears are considered serious risks by a lender. Habitual late payment indicates to the lender that the borrower is struggling to keep up.
Strangely enough, even someone who has been careful to stay out of debt and who has only bought items for cash or with a debit card may be refused credit or considered a risk, simply because he or she has not built up a credit history.
Multiple applications for credit whether they are successful or not can adversely affect a person's credit history because the too many applications can trigger a “warning bell” for lenders.
Where to Get a Credit Card with Bad Credit
Apply for credit cards at smaller retail stores. Sometimes these companies are more willing to give a person a chance. If the application is accepted, make small purchases, pay at least the minimum payment every month on time and gradually build up a good name.
Go to the current bank, savings institution or credit union where the individual concerned already has an account. If the bank has the person's business, they may be more willing to give a credit card despite the bad credit history.
Apply for a bad credit credit card. This more like a debit card where there is a minimum balance that must be maintained in the bank account. The applicant will be required to open and maintain a savings account as security for his or her line of credit; the credit line will be a percentage of the deposit. Try to get a card with the lowest fees and charges possible and ask for the highest interest rate on the cash balance.
Ask a friend or family member to co-sign for a credit card. Remember that their credit counts as well, so choose someone with good credit score. Be responsible about paying regularly because if payments are not met, it will appear as a blemish on the friend or family member's credit rating if there are missed payments.
Look for lenders offering a flexible assessment process which allows them to consider all applications fairly whatever the credit history of the applicant.
Certain credit cards aimed at people with a bad credit history or who might have been refused a card are designed to help people strengthen and rebuild their credit history. The card offers credit of between £200 and £2,500, with no annual fee. The annual percentage rate is high but can be reduced once the applicant has built up a steady payment record. One such card is Capital One's Classic Visa Card.
A credit card with bad credit will come with a higher interest rate because of the risk to the lender, so even if an applicant manages to obtain one, he or she must be responsible about paying every month. In this way, a bad credit rating can be improved and repaired over time.
Source:
mahalo.com, "How to Get a Credit Card with Bad Credit," information retrieved on 10 September 2009
More Credit Card and Loan Information that may Interest the Reader:
How to get an Unsecured Loan with Bad Credit
How to Get a Low Interest Personal Loan
Credit Card Debt Consolidation and Debt Relief
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