Using Credit Cards To Re-Establish
A Good Credit Rating
Was it bad luck or do you need help?
Hundreds of thousands of Australians suffer with bad credit. Bad credit can occur for a number of reasons. These reasons may include poor money management, divorce, child support neglect, medical issues, unforeseen accidents and events, and similar situations.
Bad credit may be the fault of the individual that experiences it, or a result of unforeseen circumstances that happened to an individual. However, creditors are unforgiving. If you owe money, you owe money…period. This makes it very difficult for a person who has bad credit to convince lenders that they are worthy for an extension of further credit. However, there are some credit cards for bad credit that an individual in this situation may find appealing.
What lenders see on your credit report
Most standard credit card companies will make a credit report inquiry prior to approving you for a line of credit. The credit report contains a lot of personal and statistical data regarding you as an individual, as well as any important financial data.
When a credit card company reviews your financial report, they can see how many open accounts you have, how many closed accounts you have, any public records pertaining to you, and any type of financial judgment that involves you. They can also see the places that you have been employed and the areas that you have lived.
If a credit card company investigates your credit report and finds that you have a lot of negative items listed like unpaid personal loans, you have not held a job for an extended amount of time, and have moved to various areas quite frequently, they may view you as a high risk. It is unlike any potential lender to make any investment in a high risk. Therefore, you will probably be denied any type of credit limit with a credit card that is offered with that company.
It is important to understand that this will prove to be harsh on the emotions.
Where to start helping yourself
However, you should proceed in your search for credit cards for bad credit. One option that you have is to open a bank debit card account, which are similar to credit cards as far as convenience, in which you may use to make purchases. Debit cards are used in place of checks. Instead of writing a check to make a purchase, or pay a bill, you can simply use the debit card instead.
Many debit cards also have a function that is considered credit. However, you will only be able to spend what is available through your bank account.
Prepaid credit cards
The next credit card option available for individuals that do not have optimal credit is the prepaid credit card. There are numerous companies that offer this type of convenience. You will be required to deposit a certain amount of money on the prepaid credit card and then load it with an additional amount in order to use it.
With this type of credit card, you do not accumulate debt as you only spend as much as you load on it. Furthermore, there are no minimum payments each month. However, you may have to pay a small service fee each month to enjoy the services offered with the prepaid credit card.
Secured credit cards
The last credit card for bad credit is the secured credit card. This operates much like a prepaid credit card. You will be required to deposit a certain amount of money to open the service with the credit card, and that deposit serves as the line of credit. Many secured credit cards often report to credit agencies. This makes this card an excellent choice for establishing credit when your overall credit score is quite low.