People who have a bad rating are likely hoping to rebuild their credit score. There are many different reasons for damaged credit, but there is always a way to rebound. One of the best ways to begin the rebuilding process is to open a new loan line. Fortunately, there are credit cards for bad credit. Although these cards may look good on the surface, it is important to do some investigating before applying for one of these cards or accepting any offers. People with scores below 550 are likely to have very limited options. Almost all banks will require some kind of deposit or monthly fee before granting a credit line.

1-Before applying for any card, be informed. It is important that everybody knows their credit score. Do not be bullied into high interest rates, ridiculous monthly fees or a steep deposit. Those who know their credit score will be able to bargain for a better rate.

2-Only take a card that will report payment history to the major credit bureaus. This is crucial to the re-establishing of one’s credit score. Regular payments are one of the fastest ways to rebuild poor credit as well as establishing a solid credit history. However, if the bank does not report the payments, the credit line will not help the credit score.

3-Once a credit line has been accepted, it is important to keep the balance low. Credit scores are negatively impacted by cards that have high balances. It is something referred to as debt ratio. Future lenders will be less likely to lend to those who have credit cards near the limits.

4-After a person has had one of the credit cards for bad credit for at least a year and all payments have been made on time, it is time to apply for another card. Apply for a card that is not secured and has a lower interest rate. Keep in mind; the best interest rates are reserved for scores above 700. It may take a little time to get there, but with a dedicated approach to rebuilding a credit score, it can be done.

5-Weigh the options presented carefully. Look for a good balance of monthly fees and interest rates. Do not be fooled by a low interest rate and a high monthly fee or vice versa. Avoid cards that charge high interest rates and exorbitant monthly fees or annual fees. Often times, cards will be offered with a low credit limit that is eaten up in the first month with an annual fee and a high interest.

Each person will have to choose the right credit card based on their own needs and current credit scores. Credit companies are naturally a little wary about extending credit to somebody who doesn’t have a proven track record. It isn’t anything personal, it is just business. By using these tips, a person will be able to make an informed decision about what credit cards for bad credit will work for them.

Wascar Aracena

Licensed Real Estate Agent & Credit Expert