Credit Cards For Bad Credit
One of the best ways to build or re-establish your credit history is by using secured credit cards, which offer guaranteed approval to all who apply.
How Do Secured Credit Cards Work?
Although they require a deposit to secure your credit limit and charge an annual fee, no credit check is ever required to apply and you are guaranteed to be approved regardless of credit history. By using your secured credit card responsibly, you can be on your way to a much improved credit score.
The reason you can get a secured credit card with no credit check, no credit history, and no employment history is because you will have to create a savings account of equal value at the issuing bank. The bank is using that savings balance as collateral to secure the total limit of your credit card. When the time comes to cancel your secured credit card, you can close your savings account and get back your deposit plus whatever interest you earned.
If you have enough cash to create a savings account and you "seriously" need to improve or build your credit history, then setting up a secured credit card is probably in your best interest. Your cash will be in the bank earning interest and you will get a credit card that will be accepted everywhere that Visa or MasterCard are accepted. There will still be some fees to deal with, such as annual fees and initial processing fees, but these are the price to be paid in order to establish good credit.
Although they are designed for people with bad credit, secured credit cards will not automatically help your credit history if you do not use them correctly. You still need to do the same things you would do to remain in good standing with a non-secured credit card, such as:
- Paying your minimum balance
- Making payments on time
- Staying under your credit limit
Also, make sure you pick a secured credit card that reports to all three major credit bureaus. This is the main benefit of secured credit credits for people who are trying to improve their credit score. If you are taking all the steps to remain in good standing, and the issuer of your secured credit card is reporting that good standing to the major credit bureaus (Experian, Equifax, and Trans Union) then you can expect to see your credit score begin to improve in the months to come.