If you have a bad credit score, you might think you won't be able to be approved for any kind of credit. But there are many lenders today who offer bad credit credit cards to borrowers with a bad credit history. These bad credit credit cards are national Visa and MasterCard brands, and are designed to offer individuals with bad credit both unsecured and secured credit.
These bad credit products will cost more than credit cards for people with good credit, but for some borrowers the price might be worth it to both get access to credit and reestablish a good credit history. Especially after bankruptcy, foreclosure or other financial event that may have damaged your credit, these cards can help you get back a good credit rating.
Bad credit credit cards come in several forms. One is a bad credit unsecured card. An unsecured card means you do not have to keep a deposit on account with the bank issuing the card. These cards are issued by both major national banks and smaller regional lenders. While at first it may seem like a good idea to get unsecured credit, an unsecured bad credit card can be expensive. There are high interest rates, application and origination fees, and even monthly fees on top of whatever you might charge. A borrower could owe as much as $200 to $350 upon opening a bad credit unsecured card.
Also, bad credit borrowers are not all approved for an unsecured bad credit credit card. Lenders are still lending you money on an unsecured basis, and will want you to demonstrate at least a steady income to pay your overall monthly debt payments. If you are not working, or have not been working at your present job for very long, you may be turned down for one of these cards.
A second option is a secured bad credit credit card. Secured cards require that the borrower deposit a certain amount of money, to secure the card, with the issuing bank. This deposit amount secures the credit line extended by the bank. If the borrower doesn't pay as agreed, the bank keeps the deposit to pay the debt. On secured products, there can also be high interest rates and fees for secured cards, which may or may not be less than those on unsecured cards. It pays to shop around a little to find the best deal.
Another plus to a secured card is that as long as you can put down a deposit, you are almost guaranteed to be approved. It can be a good option to rebuild credit if you don't qualify for a regular unsecured credit card.
Whether you prefer the secured or unsecured bad credit credit cards, use your new card to repair credit, pay your bills on time, and don't go over limit. You'll soon qualify for better credit terms and se your credit score improve.
MF Calhoun writes on credit topics for FixItYourselfCredit.com and a variety of other publications. Get a FREE list showing where to apply for credit cards with bad credit at http://www.fix-it-yourself-credit.com/badcardlist