Well, it is very easy to get approved for credit cards for bad credit. In the next section of the blog, there’ll be some cards that can help any individual in getting approved. But before discussing that first an individual should know why he is having bad credit.
A credit score is a mathematical interpretation of how a user manages his finances in the market. The way he utilizes credit available to him matters a lot. In case he never availed any loan then he falls in the category of a beginner.
Now it is very easy to figure out if the credit score is good or bad. Any individual has to just analyse some factors like payment history and total debt. This way he can get an idea of the type of credit score he is having. If he is in a habit of paying all the bills on time then most probably he is having a good credit score. In case he is in a habit of late bill payments then most probably his credit score is in a bad condition.
Why credit score matters?
Well, the way individuals are becoming dependent on credit for financial decisions proves the importance of credit score. Approximately 70% of the population of the United States use a credit card. In this, approximately 34% of the population carries 3 or more credit cards.
Nowadays people are using credit cards to fill their financial gaps. This is because some people want to fulfil their short term goals. And some people want to maintain their high standards of living. Having a credit card can help a lot in difficult times. Thus, everyone wants to have a credit card.
How to get approved for credit cards with bad credit?
As discussed above the individual should first understand if he has a good or bad credit score. In case of bad credit, he should start implementing steps which can rebuild his credit score. This rebuilding process can work in two parts.
In the first part, the individual should work on the main factors which affect the credit score. These factors are payment history, total debt, credit mix, new applications of credit card etc.
In the second part, an individual can use low credit score credit cards. These cards are specially designed for people who want to improve their credit score. Let us check some secured credit cards for bad credit:
•Secured credit cards: Secured credit cards are backed by an initial deposit amount. This initial deposit is equal to the credit limit of the individual. For example, if an individual wants to have a credit limit of $1000 then he has to deposit an amount of $1000 initially.
These cards can be easily availed by the individuals who are having a bad credit
score or no credit history. This is because in case the user defaults or is unable to pay back then banks can recover their amount with the help of initial deposit. Due to this security feature, these cards are called as secured credit cards or credit cards for poor credit.
•Going for a credit builder loan: Before any user gets confused, this is a loan, no a credit card. This is one of the safest ways of improving the credit score. This loan matters a lot as it can help a lot of individuals in availing their first credit card.
The working of the credit builder loan is very easy. The individual applies for a loan and if he is approved, the total amount is deposited to a special account. This account cannot be accessed by the user. After this, the user has to make monthly payments to the lender. This way the loan activities are generated and reported to the credit bureaus. Once the user completes all the monthly payments, he gets access to the money deposited in a special account.
•Credit cards for students: These credit cards are specially designed for students. Banks and companies understand that students do not have any credit history. Thus, they keep the credit score requirement negligible.
•Consulting regional banks: In case the individual is having a banking relationship with a local or regional bank then he can avail a credit card. This is because he is having some financial transactions in his bank account for a long time. In case the individual is having accounts in multiple banks then he should compare credit card rates.
•A retail store card: These types of cards can be used at a specific store or chain of stores. In the case of retail store cards, there is no need of having an initial deposit like in secured credit cards. Since these cards are specifically designed for shopping purposes, they offer high rewards and cashback.
Keeping a store card can improve the credit score with time. Depending upon the type of group of stores, there can be a variety of offers. Thus, any individual should compare cards before purchasing them.
