People who have a poor rating are likely hoping to rebuild their credit score. There are many different reasons for damaged credit, but there is always a way to rebound. One of the best ways to begin the rebuilding process is to open a new loan line. Fortunately, there are credit cards for people with poor credit scores. Although these cards may look good on the surface, it is important to do some investigating before applying for one of these cards or accepting any offers.
People with scores below 550 are likely to have very limited options. Almost all banks will require some kind of deposit or monthly fee before granting a credit line.
1-Before applying for any card, become informed. It is important that everybody knows their credit score. Do not be bullied into high interest rates, ridiculous monthly fees or a steep deposit. Those who know their credit score will be able to bargain for a better rate.
2-Only take a card that will report your payment history to the major credit bureaus. This is crucial to reestablishing your credit score. Regular payments are one of the fastest ways to rebuild poor credit, along with establishing a solid credit history. However, if the bank does not report the payments, the credit line will not help your credit score.
3-Once a credit line has been accepted, it is important to keep the balance low. Credit scores are negatively impacted by cards that have high balances. It is something referred to as debt ratio. Future lenders will be less likely to lend to those who have credit cards near the limit.
4-After a person has had one of the credit cards designed for people with poor credit scores for at least a year, and all payments have been made on time, it is time to apply for another card. Apply for a card that is not secured and has a lower interest rate. Keep in mind that the best interest rates are reserved for people with scores above 700. It may take a little time to get there, but with a dedicated approach to rebuilding your credit score, it can be done.
5-Weigh the options presented carefully. Look for a good balance of monthly fees and interest rates. Do not be fooled by a low interest rate and a high monthly fee or vice versa. Avoid cards that charge high interest rates and exorbitant monthly fees or annual fees. Often, cards will be offered with a low credit limit that is eaten up the first month with an annual fee and high interest.
Each person will have to choose the right credit card based on their own needs and current credit scores. Credit companies are naturally a little leery about extending credit to somebody who doesn’t have a proven track record. It isn’t anything personal; it is just business. By using these tips, you will be able to make an informed decision about what credit cards for people with poor credit scores will work for you.
Renata DeOliveira is the owner and CEO of Help My Credit – Credit Restauration and Educational and Services. For more information, please call 888-627-2733 or visit www.helpmycreditcompany.com.