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How do I get a credit card if I have bad credit?
Your credit file will determine your eligibility for credit cards and the cleaner your credit file is, the better type of cards you will be offered. For instance, if you have a clean credit rating, you may get offers for cards with no membership fees, higher limits and low interest rates. If you have a rating that is considered good, you may still be offered prime cards, but they will have higher interest rates. The more black marks (Defaults, late payments etc), the higher the interest goes.
If you have a bad credit rating, you can still get a credit card, but it may be under different terms than usual credit cards. For instance, you could choose an unsecured credit card. It will have a high rate of interest and a low credit limit. However, after you make a few payments on time and do not go over the set limit, the limit may be increased. Some companies will agree to give a $500.00 dollar increase after two payments, while another will give a semi-annual credit limit increase. They also report your on-time payments to your credit file, so that if you are making your payments on time, and you are making your other monthly payments on time, your credit score has the potential to rise.
You could also choose to use a secured credit card. Companies that offer these cards will open a savings account for the amount of your card limit, which will serve as security for your line of credit. The amount of the allowable card limit depends on the company, some will allow up to $25,000 dollars. These companies also report your payment information to your credit file, so it is important to keep this card in good standing. Some cards even offer reward points.
There are also prepaid debit cards. You load the card with a payment for the balance you want, which there may be a minimum and a maximum amount depending on the card you choose. If you load the card with $500 dollars, you will have a $500 dollar limit. There are several different cards to choose from and some do not require a bank account. If you choose to have your paycheck or your government cheque put into the card account by direct deposit, you can avoid monthly fees and transaction fees. Of course, you will not be able to go over the limit, but you can reload the card whenever you need to. Even people with great credit may at times choose these cards, because it does not require as much personal information to set up the account.
Whichever type of card you choose to use, they will all have a recognized emblem, which will allow them to be used anywhere those particular credit cards are accepted. There is nothing on the card that will make them appear to be anything other than a normal credit card. Their only difference is in the terms or interest rate.
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