Dealing with a bad credit rating can seem like a daunting challenge with no real options for financing.
However, when it comes to applying for credit cards when you have bad credit, there are a number of options that you can pursue while still gain one with great rates while improving your credit rating.
How does bad ratings occur?
A bad credit rating occurs whenever the account holder fails to make a payment on any outstanding bills, leaving them with bad marks on their credit reports.
These credit ratings are used as an evaluation of the applicant’s ability to repay any future debts or loans. It will also provide identification proof of personal details and financial history for any financial agencies that may be considering your application, including home loans and personal loans.
The bad marks will work against the account holder for any future financial applications or loans as they indicate to any credit agencies or banks that you are unable to manage your finances and are an “undesirable” candidate for any financial assistance.
All this information is stored on your credit file which is created for every person who has had active credit cards or loan in the last seven years and records information including name, the institution applied with, the limit amounts and the reasoning or purpose given for getting the financing.
The range of information will be updated and deleted, after five years for any credit cards application and seven years for serious credit infringements and bankruptcies.
While this may seem like a long period of time, it is recommended that people check their credit file every year to ensure that all information is correct from basic details of your name and address to all financial recordings within your credit file. This includes overdue payments, any credit cards applications and any other financial infringements.
What are your options?
Of course, if you are looking for a credit card now and have bad credit, there are a number of options available to you.
For starters, while you may not be eligible for the majority of unsecured credit cards on the market, there are several unsecured credit cards that are designed for people with bad credit, with most having a simple online application process that will assess and provide a response instantly.
Of course, if unsecured credit cards are still not a viable option then many people can opt to use secured credit cards. These are able to improve your bad credit rating as long as you use them responsibly.
They work by creating a link between your cards to an existing savings or checking account, meaning the lender has the security of knowing that you have the funds available to sustain your credit cards while you benefit from an improved credit rating from regular payments.
Finally there is the prepaid credit or debit cards option, which are also linked with a person’s savings or checking account.
These are ideal for those people with bad credit who simply cannot qualify for any credit applications or loans. These have no risk of accumulating bad credit so therefore are a great option for people who may be struggling with bad debt.
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