Credit cards are a necessary evil in life. In fact, you often need a credit card to book an airline ticket, reserve a hotel room and set up an account with a utility company. Having a credit card in your name is a fast way to build a credit history. The stronger your credit history, the easier it is to get loans and low interest rates on your loans. Unfortunately, your options are limited with no credit or low credit.
Even if you have low credit, you can find a credit card to help improve your present standing. Credit cards are helpful because some creditors report your account activity to the bureaus. In this case, smart moves like paying your bills on time and paying off your accounts can significantly improve your credit rating and make you an ideal candidate for loans.
Here are three options available to people with low credit.
Finding a low credit credit card can be as simple as driving to your personal bank. Everyone needs a fair opportunity to improve their bad credit rating, and many banks are prepared to give bad credit people a second chance. With a secured credit card, you can acquire a new credit account with only a $300 deposit. You don’t have to worry about rejections because of your low credit. In fact, these types of credit cards are designed specifically for people with low credit. Submit a credit application and include your deposit with the application. The bank holds your deposit in a savings account and issues a credit card with a limit that corresponds to your deposit. Use your new credit card for purchases and then pay off your balance in full each month to help increase your low credit score. Keep this up for at least six to 12 months and you can improve your bad credit.
Bad Credit Credit Cards
Some banks offer bad credit unsecured credit cards, which are also designed to help you build your low credit. Although available, finding a bank to approve your application for a bad credit unsecured credit card is tricky. If approved for this type of credit card, you are not required to pay a security deposit. But you will pay a set up fee, a monthly fee, plus a high interest rate.
Prepaid Credit Cards
Prepaid credit cards offer an easy and fast way to obtain a low-credit credit card. There is no application process. Simply visit a local store, purchase a prepaid card and deposit funds in your account. Your credit limit is your deposit and you can only spend what you deposit in your account. And since prepaid credit cards feature either a Visa or MasterCard logo, you can use your card wherever Visa or MasterCard are accepted. But there’s a catch. Although prepaid credit cards can help you develop good budgeting and credit habits, your credit activity with these cards is not reported to the credit bureaus. Therefore, a prepaid credit card does not improve your credit score.