How To Get A Credit Card With Bad Credit : With 3 Methods

doylc.com - How To Get A Credit Card With Bad Credit - Even if you have a bad credit history, you can work on rebuilding it. There are several ways to get a credit card. You might get a secured card, get a card with someone to help you by cosigning, or take a card that requires some additional fees. Once you manage to get your first card, you can then use it wisely and rebuild your credit score.

Getting a Secured Credit Card

Have a deposit ready. To get a secured credit card, the bank will require you to deposit money into a bank account. The credit company then grants you a credit card with a line of credit up to the amount of money that you have on deposit. Vendors will see your credit card as a "regular" card and won't know that it is secured.

You may be able to find a bank that will grant you a credit limit that is a bit higher than the amount that you deposit. However, in most cases, your "credit" will be limited by the amount that you have in the account. That way, the bank will be assured that they will get paid.

Research lenders with secured credit card offers. Even though the credit card is secured, you still need to do some research and pick a good offer. Secured cards have rules and interest rates that make some offers better than others. You should do some research and find the offer that best fits your needs.

Check with your own bank first. The local bank that you already use for savings or checking may offer a secured credit card plan that can help you. The bank may not advertise a secured card, but you should ask a lending manager to find out.

Use the Internet as well. Search for "secured credit card," and you will find numerous offers. Review the offers and contract terms to find one that seems good to you.

Get a secured credit card that reports your payments to credit agencies. You will want your secured card to help you begin rebuilding your good credit. You need to make sure, then, that the lender will report your payments to the credit reporting agencies. Not all secured cards will do this. When you apply, check the contract to find out. If the contract does not say, ask the lending manager.

The three major credit reporting agencies in the U.S. are Equifax, TransUnion and Experian. They receive reports from your creditors about your payments and use that information to compute your credit score. If you are making your payments on time for your new secured card, you will want them to receive that information.

At the site, CompareCards.com, you will find a list of ten different credit card offers. You can review these to find which will "Report to Credit Bureaus" or "Build Credit When Used Responsibly."

Compare interest rates and fees. Secured credit cards vary in the terms of repayment and interest rates and fees, just as regular credit cards do. You should do some basic research and compare the interest rates and fees that various lenders will be charging. Although you may feel that your bad credit limits your options, you still have some choices.

Look for cards with incentive awards. Even secured credit cards may offer incentive awards to try to get your business. Some lenders offer cash back awards on the the purchases that you make. Look for a lender with a strong offer. Try to find cash back on items that you purchase regularly, so you can make the most use of the offer. By using the card regularly and wisely, these incentives can almost earn money for you.

Transition to an unsecured credit card when you can. In the beginning, you will have to work with the terms of your secured credit card. If you pay your monthly bills on time, you may eventually be able to apply to your bank for a "regular" unsecured credit card. If you are a good customer, you may be able to reach this level within about a year.

Signing on as an Authorized User

Get a trusted friend or family member to help you. If you know someone who has stronger credit than you do, they may be able to help you get a credit card. That person could use an existing credit card and add you to the account as an authorized user. This would give you automatic access to a credit account, and your bad credit report is not likely to hurt your friend..

If you sign on as an authorized user, you must make sure that you pay your bills on time. If you are late with payments, any delinquencies will hurt your friend's good credit, and may result in having you removed from the account.

Parents are the most common people to grant authorized user arrangements for their children. Parents who have good credit can get a credit card, or use one that already exists, and add the child to the account as an authorized user.

Verify that the account will help you. Before signing on as an authorized user, you should find out from the bank how your payments as an authorized user will be credited to your own credit report. If the lender says that your payments do not benefit your own credit history, then the deal is of little use. You may want to look for another lender in that case.

Know your credit limit. The primary card holder might ask the card issuer to establish a separate credit limit for you as an authorized user. This can be kept separate from the primary user's credit limit. You should consider what you believe you will need and how much you can be sure that you will pay on time.

Manage the account carefully. Credit reporting agencies see you as an equal credit holder, even though you may just get started as an authorized user on someone else's account. To vendors and the credit reporting agencies, you are another co-equal borrower. The primary card holder is counting on you to make your payments on time. You need to manage the account and the payments carefully, to help rebuild your credit.

Learn how to remove yourself from the account. This kind of deal is usually supposed to be temporary, until you can rebuild your credit and get a card on your own. Before you sign on as an authorized user, you should check with the lender to make sure that you will be able to terminate the relationship at some future time.

Rebuilding Your Credit Score

Limit your credit applications. When you apply for credit, the prospective lenders make formal requests to your credit agencies to review your credit report. Too many reviews of your report can actually trigger a negative impact on your score. You need to be judicious in the number of applications that you submit. If you are fairly certain that you may be denied, then do not bother with the application.

Make use of your credit card once you get it. You need to demonstrate not only that you can get a credit card but also that you can manage and use it. It is important to make purchases each month, but it is equally important that you manage the account. Buy only the items that you can afford and will be able to pay at the end of the month. In short, you should treat your purchases as though you are using cash, but set aside the payment for the credit card bill at the end of the month.

Manage your debt to credit ratio. Part of your credit score is based on your debt to credit ratio. This is the ratio of the balance that you owe, divided by the amount of your total credit limit. For example, owing $1,000 debt, if your credit limit is $10,000, is a 10% ratio. However, owing the same $1,000 if your credit limit is only $3,000 would be a 33% ratio. To keep your credit score in the good range, you should keep this ratio to about 25% or less.

Pay your bills on time. This seems obvious, but it is worth stating clearly. You must pay your bills on time. Late payments are the primary thing that will reduce your credit score. You should find ways to develop good habits, like marking due dates on your calendar or even in your smartphone. If you have a regular income, you may be able to arrange for automatic deduction payments, which guarantee that your bills will be paid on time.

Monitor your credit score and credit report. In the United States, three primary credit reporting agencies--Equifax, TransUnion and Experian--keep track of peoples' credit scores. When you need to rebuild your good credit, you should monitor your reports with all three agencies. You can get a free copy of your credit report from each agency once a year. Read the report carefully and look for any inaccuracies or missing credits.

You can learn more about each of the three main credit reporting agencies at the following websites:

TransUnion: www.transunion.com.

Equifax: www.equifax.com.

Experian: www.experian.com.

If you see activity on your credit report that you do not recognize, you should contact the credit reporting agency immediately to investigate.