People with bad credit or poor credit are often face
difficulties in obtaining a credit card. The fact is indeed true that their
choices are limited when it comes to credit cards but, credit card issuers are
increasingly offering financial products that specially cater to bad credit
Bad credit problem can be caused due to a number of situations. The credit
card choices available to bad credit people allow them to rebuild their credit
history. Financial products that help bad credit people are prepaid credit cards
or debit cards, secured bad credit cards, unsecured bad credit cards. In this
article we take a look at each one of them.
Prepaid or debit cards:
These are the easiest option available for bad credit people. There are no
verifications, no credit checks, no employment requirements, and the approval is
instant. All they have to do is to deposit a money and a prepaid card is issued.
This card has the borrowing or buying capacity equivalent to the funds
deposited. The good thing with prepaid credit card is that it promotes financial
discipline. Some prepaid card issuers report to various credit rating agencies,
thus it helps in rebuilding your credit history.
Secured bad credit credit cards
These credit cards are issued to bad credit people who can offer a
collateral. Generally, offered to homeowners, secured bad credit cards help one
rebuild his credit history. The interest rates and borrowing limits on these
credit cards are good and favorable for bad credit people. Secured credit cards
can also be linked to a savings account in which case it will have a credit
limit of some percentage of your savings or money in your account. As the credit
card issuer gains confidence with you it can increase your credit limit. Again,
if you control your finances and spending, repay on time and do not default your
credit history will improve.
Unsecured bad credit credit cards
These credit cards have high fees, which makes them a costly proposition to
own. But, the bad credit people have limited choices. If a person with bad
credit doesn't have anything to offer as collateral or is unable to buy a
prepaid or debit card. This is the only option that remains. However, on a
positive note, this unsecured bad credit credit card offers the person a chance
to rebuild his credit history.
So, the options are there for bad credit people to have a credit card. But if
they don't learn lessons from their existing situation and do not improve things
will get worse with time and become uncontrollable.