Credit cards for bad credit?
Many of us already know the pros and cons of having a credit card. They’re great financial tools to have if treated with respect, and experts agree that they can create a habit of financial discipline when used in the right way. However, if you’ve recently applied for a credit card and have been rejected, there’s a high chance that you have a bad credit history.
With a bad credit history, you quickly find yourself with limited options to borrow money online, a high street bank or other financial institution. The following tips are designed to give you an insight to what happens when you declined, whilst offering great ways of rebuilding your name from scratch to improve your credit rating permanently.
Rejection – If you’ve got bad credit, credit cards don’t exist
You may have found yourself getting rejected almost instantly from credit card companies if you have an untidy credit history. Ever since the financial crisis that lead to the UK falling deep into recession, banks have adjusted the ways in which they lend money to the public. Credit cards for bad credit aren’t as widely available as they used to be, so individuals find themselves seeking new avenues of credit & borrowing. Picture the entire process as a game of trust – If you have a bad credit rating, the banks won’t trust you – It’s up to you to get that trust back.
Understanding how the credit rating system works can be a difficult and long winded task – there’s plenty of resources available to help understand credit rating. If you have a few minutes, the following link is a great resource: credit rating (http://www.experian.com/credit-education/understanding-credit-scores.html). The one thing you do need to remember is that all banks utilise a very similar credit system. If you’ve let one credit card company down, the chances are you won’t be looked upon in good light by another.
Action – Overcoming rejection and working with “bad credit” credit cards
After applying for a credit card with your bad credit history you may find yourself getting that dreaded rejection letter. Try to not let it get you down, it’s just one company after all – remain focused on the task in hand. It’s important at this point to not exhaustively apply to lots of different credit card companies in one go – a simple search for your credit rating followed by a rejection results in a collection of bad marks on your credit rating. Not many people know this, but simply searching for your credit rating adds a negative mark to your name, harmfully affecting your credit rating.
It’s common for individuals searching for “bad credit” credit cards to trawl through a number of companies, only to get rejected before moving onto the next credit card company in hope that they’ll be accepted. The build-up of searches and rejections can throw your credit rating into turmoil – This is what’s known as the “rejection spiral” by many in the financial trade.
Resolution – “Bad Credit” Credit Cards do exist, but they’re expensive
At this point you will have a good idea as to whether you can get hold of a credit card. If you have been rejected a number of times, it’s important that you seek professional financial advice before taking the matter any further. You are in danger of tarnishing your image long term if you don’t make the right moves from this point on.
Furthermore, you also may have realised that cards with decent interest rates or credit cards with special deals really aren’t interested in helping you. Instead, you need to focus on rebuilding your credit rating gradually regardless of circumstance – patience is something you’ll need in abundance.
A first port of call is to look at getting a credit card with a high interest rate / low credit limit i.e. something with very little room to make mistakes. Once you take one of these cards it important that you pay what you borrow on time and in full. Avoid any late charges at all costs, and be sure to avoid the escalation of high interest rates.
Credit card companies that offer credit cards for bad credit individuals are essentially taking a large financial risk. In order to make that risk worth their while, they offer the card with a significantly higher interest charge that one might expect – See it as a high price tag for the privilege.
Conclusion – Play the game properly with “bad credit” credit cards for real results
The bottom line is that borrowing any money using these “bad credit” cards should only be seen as a way to begin the clean-up process of your messy credit rating. Creating any on-going debt using these credit cards can prove to be monstrously expensive – something you should endeavour to avoid completely.
You should see the “bad credit” credit card as an opportunity to make long term beneficial changes for your financial future. Once you get your hands on a new credit card, try spending a small amount of money each month with an objective of paying it off almost instantly. You’ll soon find yourself back on the road to financial recovery.
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