A bad credit history, due to missed and late repayments, is a problem facing a growing percentage of all consumers. In order to guard against the risk of the borrower defaulting, lenders have been far more careful in terms of whom they lend money to.
This has resulted in a large demand for the guaranteed acceptance credit card. A really bad credit credit card works in the same way as a regular card so the merchant need never know that a credit card for poor credit is being used to pay for his goods and services.
Information About Unsecured Credit Cards for Poor Credit
All bad credit history credit cards attract a higher APR and additional charges. The initial credit limit is also low, typically just $250, but it is likely to be increased once 6 repayments have been received on time. They then start to become more useful to the cardholder.
Charges are usually front-loaded so only some of the credit limit remains until the fees have been cleared. This is a very important consideration. Only use the card frugally and settle the balance in full within the designated grace period to avoid the accrual of interest or create further debt problems.
Types of Guaranteed Acceptance Credit Cards
Secured cards. The customer will provide collateral (property or a cash deposit) in order to enjoy a higher credit limit. Although acceptance is guaranteed, failing to settle the outstanding balance on a secured credit card could lead to the collateral being repossessed and sold.
Unsecured cards. An unsecured bad credit history credit card will have a low credit limit, although this could be increased in the future. No collateral needs to be provided and, as is the case with a secured card, it can be used to rebuild credit more quickly.
Pre-paid cards. Customers load their own cash onto the card in return for a small fee. There is no credit limit or reporting to credit reference agencies. The pre-paid credit card is particularly useful for budgeting and improved personal money management.
Rebuild Credit with a Guaranteed Credit Card
The majority of really bad credit credit card providers report to the three major credit reference agencies at month end. Each punctual repayment will help to improve credit score ratings and establish eligibility for mainstream financial products in the future.
Contrary to popular belief, rebuilding credit with guaranteed acceptance credit cards is not something that happens over night. However, it may be possible to get a mortgage following chapter 7 bankruptcy or repossession in as little as two to three years. Minor transgressions can be overcome in just six months.
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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