Getting a Credit Card with a Bad Credit Rating
4032
Finance > Credit
Mar 1, 2007
Nicholas Hunt
Getting a Credit Card with a Bad Credit Rating
Paying with plastic has become a common part of everyday life, with more people now using credit or debit cards than cash for day to day purchases. The rapid rise of online shopping means that it's almost essential to have some way of paying by card, but people with poor credit ratings have always struggled to get approved for credit cards. It's not impossible though, and there are ways for people with even the most impaired credit histories to enjoy the convenience of plastic.
People with mild credit problems or low incomes will probably not be approved for the most heavily advertised credit cards with the most attractive offers, but many companies operate a policy known as Risk Based Pricing. This basically means that their cards will offer a different interest rate depending on the credit score of the applicant. If your credit rating isn't good enough to be accepted for the card you apply for, you may be offered a different card with similar features but a higher interest rate.
Risk based pricing is a great way for people with some adverse credit history to get a card, but people with more severe problems will need to look elsewhere. Several companies offer a card specifically aimed at people with poor or no credit history, and market them as a 'first' or 'starter' card. The idea is to offer a card with a low credit limit and a comparatively high interest rate, as a way of allowing people to being to develop some positive history on their files.
While these cards are poor value in comparison to more mainstream offers, the acceptance rate is very high and by opening an account and keeping up with your repayments, your credit rating will slowly be improved to the point where you may be able to apply for a cheaper card further down the line.
People with more severe credit problems such as bad debt or a previous bankruptcy may find that even these starter cards are out of their reach, which leaves only one real option : prepaid cards. These cards, also known as secured cards, are not in fact credit cards at all as they need to be 'loaded' with funds before you can use them to spend.
After you've credited money to your account, the card can be used like any other Mastercard or Visa, with the important difference that you can only spend money that you have in your account - you can't build up a debt. This means that there is very little risk for the card issuer, and so acceptance is virtually guaranteed. The flipside is that the issuer doesn't earn money by charging interest on your balance, and so they instead impose a variety of different charges on the cardholder ranging from a small percentage of everything you spend using the card to a monthly or yearly administration fee. You may also be charged a considerable sum for even applying for the card, so shop around and check the small print carefully before signing up.
To sum up, no one would deny that a bad credit rating makes it harder to get a credit card or other plastic payment solution, but with a little searching, there are cards of some kind available for nearly everyone.
About the author: Nicholas Hunt is a freelance writer currently contributing to the 1Stop Finance personal finance comparison site, where you can read more about credit cards for bad credit and compare credit card deals.
Manny Jefferson is webmaster of NoFaxPaydayLoanOnline.com an online provider of M http://www.nofaxpaydayloanonline.com no fax payday loans on the Internet for over 3 years
People with mild credit problems or low incomes will probably not be approved for the most heavily advertised credit cards with the most attractive offers, but many companies operate a policy known as Risk Based Pricing. This basically means that their cards will offer a different interest rate depending on the credit score of the applicant. If your credit rating isn't good enough to be accepted for the card you apply for, you may be offered a different card with similar features but a higher interest rate.
Risk based pricing is a great way for people with some adverse credit history to get a card, but people with more severe problems will need to look elsewhere. Several companies offer a card specifically aimed at people with poor or no credit history, and market them as a 'first' or 'starter' card. The idea is to offer a card with a low credit limit and a comparatively high interest rate, as a way of allowing people to being to develop some positive history on their files.
While these cards are poor value in comparison to more mainstream offers, the acceptance rate is very high and by opening an account and keeping up with your repayments, your credit rating will slowly be improved to the point where you may be able to apply for a cheaper card further down the line.
People with more severe credit problems such as bad debt or a previous bankruptcy may find that even these starter cards are out of their reach, which leaves only one real option : prepaid cards. These cards, also known as secured cards, are not in fact credit cards at all as they need to be 'loaded' with funds before you can use them to spend.
After you've credited money to your account, the card can be used like any other Mastercard or Visa, with the important difference that you can only spend money that you have in your account - you can't build up a debt. This means that there is very little risk for the card issuer, and so acceptance is virtually guaranteed. The flipside is that the issuer doesn't earn money by charging interest on your balance, and so they instead impose a variety of different charges on the cardholder ranging from a small percentage of everything you spend using the card to a monthly or yearly administration fee. You may also be charged a considerable sum for even applying for the card, so shop around and check the small print carefully before signing up.
To sum up, no one would deny that a bad credit rating makes it harder to get a credit card or other plastic payment solution, but with a little searching, there are cards of some kind available for nearly everyone.
About the author: Nicholas Hunt is a freelance writer currently contributing to the 1Stop Finance personal finance comparison site, where you can read more about credit cards for bad credit and compare credit card deals.
Manny Jefferson is webmaster of NoFaxPaydayLoanOnline.com an online provider of M http://www.nofaxpaydayloanonline.com no fax payday loans on the Internet for over 3 years
Write a Review
Add to My Favorite
Refer it to Friend
Report Article
Other links owned by this user
With summer finally getting into full swing, many of us will be looking forward to travelling abroad for a well earned holiday. Of course, you'll need access to cash while you're away, so what are the best and safest ways of arranging your travel
Category:
While payday loans have long been popular in the USA, they are a relatively new service for UK customers, and many people aren't sure exactly what they are. With all the controversy over whether they're a worthwhile service or simply a form of
Category:
Despite easier than ever access to personal finance services, there are still 3 million adults in the UK today who are completely outside the banking system, and don't have access to a bank account. Many of these people are unable to get a
Category:
Paying with plastic has become a common part of everyday life, with more people now using credit or debit cards than cash for day to day purchases. The rapid rise of online shopping means that it's almost essential to have some way of paying by card,
Category:
Having a County Court Judgement or CCJ issued against you will have a severe impact on your credit rating, as it signifies that you have had serious problems paying back a loan or other form of credit, to the extent where your creditor has had to take
Category:
Banking experts estimate that up to ?5bn may be sitting unclaimed in UK bank accounts that have gone 'dormant'. What does this mean, and could you be entitled to a share in this huge amount of idle money? A bank account goes dormant when, in the
Category:
No one likes paying for home insurance, but it's a necessary evil for most of us. This doesn't mean you have to pay through the nose for it though - try these 8 easy tips for cheaper home insurance and see how much you could reduce your premiums
Category:
Millions of people are finding that their debts are becoming a serious problem, as the effects of years of easily available credit start to bite. There are also many companies who promise to solve all your debt worries, slashing your repayments and
Category:
Reducing your overall debt level as much as possible is always a good idea, and is usually recommended as part o a budgeting plan. I you have some spare unds available, you might be tempted to clear your personal loan, as nearly all loan plans allow
Category:
Other links at Finance > Credit
A brief discussion of what APR is and the various methods used by credit card issuers to calculate it.
Category:
We all want to get rid of the burden of debts. All you got to do is curb your expenses and earn your paycheck regularly. But is this as simple as it sounds? It is truly said that actions speak louder than words. So only when you actually try to get rid of
Category:
Filing bankruptcy doesn't mean that you can never have credit again. As a matter of fact, the point of filing bankruptcy in the first place is to help people who have made disastrous financial decisions in the past, learn from their mistakes and move on.
Category:
There are also other factors to think about when choosing a new credit card, these are factors other than the best credit rates, such as other charges and fees. You must asses your personal needs and think about how you are planning to use your new credit
Category:
Most students are probably allowed to use extension or supplementary credit cards linked to any of their parents' personal accounts when they go to college, but having a college credit card for their own use is just a step towards independence.
Category:
Site Sponsor
Directory Statistics
Articles: 68205
Categories: 501
Yahoo Entertainment
