Bad credit can impose limits on the amount of credit that you are going to be eligible for. Although a bad credit rating can create a difficult time obtaining a mortgage, vehicle loan and even a loan, it is possible to obtain a credit card – even if your credit rating is less than perfect.
Most companies will not issue unsecured credit to customers with a credit rating of less than 640. At this point, these customers must find alternate routes to credit which can help to increase the credit rating to be approved for unsecured credit in the future.
Secured credit cards are crucial for rebuilding your credit rating. Secured credit cards allow the consumer to use credit while providing a deposit to the credit card company which is less than or equal to the credit limit granted to the card holder.
When applying for a secured credit card, approval is practically guaranteed. With the use of past credit information and personal information, the credit limit is based on the amount of income that has been declared and the amount of a deposit that has been provided by the applicant.
Secured credit card offers can be found on the internet through a variety of lending institutions and are also available through your regular bank. A visit into the bank is often necessary to apply for the secured credit card and will require the deposit of funds. This will establish history with the bank and develop the credit to obtain vehicle and mortgage loans in the future.
Through the term of the secured credit card account the deposit accrues interest for the card holder. At the end of the term or after a significant amount of history has been developed between the cardholder and the credit card company the money is returned to the card holder. The money is either applied to the account of the card holder or sent to the card holder in the form of a check.
Each month, the credit card company reports the credit card activity to the three major credit agencies and therefore positive account history can increase the credit score in as little as six months. Secured credit cards are a great way to establish credit, maintain a credit history and rebuild bad credit.
It is important to remember that credit can be granted to those with less than an optimal score. Although the card holder must secure the credit with a deposit, it is a valuable tool to developing your credit rating.