Bad credit history credit cards were introduced because so many people no longer qualify for mainstream financial products. Failing to comply with the terms and conditions of an agreement will result in a low credit score. This makes it far more difficult to get approval for loans, mortgage and charges cards in the future because that individual now represents a far higher risk to the lender. Credit cards for people with poor credit typically charge higher interest and have more fees to underwrite the likelihood of the borrower defaulting again.
Why Do Customers want a Bad Credit History Credit Card?
Whilst some customers simply want a way to pay their bills and manage their finances better, others are seeking a way to rebuild credit for the future. It can be almost impossible to book a hotel room or get the car repaired without a charge card. Poor credit credit cards are physically identical to their mainstream equivalent so very few people will ever know that adverse credit is an issue.
Types of Poor Credit Credit Cards
- Pre-paid credit cards. The customer loads the card with their personal funds. Although there is no credit limit, an application is guaranteed to be accepted. Helpful for managing finances.
- Unsecured credit cards for bad credit. Although the credit limit is low, lenders will report to credit reference agencies. Limits can be increased once reliability has been proven.
- Secured credit cards. Providers lend money on the basis of collateral. Security could be a house, car or even a cash deposit. Higher credit limits are available and lenders will report to credit reference agencies.
Credit Repair with Unsecured Credit Cards for Bad Credit
Once someone has benefited from a debt solution, it is quite possible that no active credit agreements exist. A poor credit credit card can be used to recover from a low credit score. Although most lenders only give customers a minimal credit limit (perhaps $250), they will report to Experian, Equifax and TransUnion each month. A series of timely repayments will help to gradually rebuild credit and increase the likelihood of approval for mainstream financial products in the future.
How to Get Guaranteed Credit Card Approval
Only a secured or pre-paid credit card application is certain to receive approval because there is zero risk to their balance sheet. There are also unsecured credit cards for bad credit available, but the charges tend to be quite high. Provided that the borrower appreciates that the cost of borrowing will now be higher, the likelihood of acceptance for a bad credit history credit card with a low credit limit is excellent. Once a customer has made a series of repayments on-time (normally after six months), a request to increase the credit limit can normally be made.
Asa Ghaffar - Asa has over 10 years of practical experience in loan approval, secured lending, bad credit repair, stock trading and debt management.
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