Getting a Credit Card with Poor Credit Score

A credit card allows the borrower the ability to purchase goods or services using the amount provided by the credit card company. Typically, the borrower is supposed to return the amount used along with interest rate at the end of the month. Each credit card has a limit to which the borrower can spend.

Credit Cards For People with Poor Credit and No Money Down

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Pros

  1. Delay
    The credit card allows you to purchase a good or service and not pay for it until a few weeks. The payment will be due at the time of the bill payment.
  2. Protect
    If you ever find a defective product in a store that does not give refunds, your credit card will provide a refund.
  3. Stolen
    If your credit card is stolen or misplaced, you can inform the credit card company. They will immediately close the account and open a new one.
  4. Easy to Track
    You can use the credit card history to track down all the purchases you have made. This can be helpful in creating a budget or preparing for tax.

Cons

  1. Compound Interest
    Delaying payment indefinitely can increase the interest rate so high that it is impossible to repay.
  2. Spending More
    Psychologically, you tend to purchase more with a credit card as compared to cash.
  3. Late Fee
    The borrower is often charged a late fee for being unable to pay on time. Not only is dealing with a late fee a hassle, it can also significantly decrease your credit score.
  4. Credit Score
    Though having multiple credit cards could improve your credit score, if you are using more than 20% and diligently paying the credit card company, your credit score will drop.

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Getting a Credit Card

After the background on credit card, let us see how you can get one. The most important factor that is considered before receiving the credit card is your credit score.

Choosing

Since there are a large number of credit cards, you should compare them with each other and select the ideal credit card which suits you the best. Additionally, you have the interest-free period, so you can make the most out of that situation. Remember to spend as much as you can pay by the end of the month. Amidst the numerous credit card companies, you can also select one after comparing their incentives with each other.

Comparison

We briefly discussed the importance of comparing the credit cards. There are tools that can be used to compare credit cards with one another, for example, using comparison websites. However, there are a few credit card companies that do not appear on those websites. So, you would have to look around on your own.

Considerations

There are multiple factors that need to be considered for the selection of a credit card. The annual percentage rate (APR) is the interest you would pay at the end of the year. In addition, consider the extra charges and incentives while selecting the credit card. How does debt consolidation work?

If you are unable to pay the complete balance, the credit card company requires the payment of a specified minimal amount. Then, you consider the annual fee you have to pay for using the credit card.

After a certain period of time, the interest rate increases. The period of time and the interest rate vary from company to company. Before selecting a credit card, you should also check this factor.

Lastly, you should also consider the loyalty points, rewards, and any other incentives of the credit card. The cash back factor can also play an important role. You have to evaluate the amount of money that will be received.

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Poor Credit Score

If you have a credit score lower than 549, a large number of credit companies would not cater to your needs. However, a new credit card can give you the opportunity to start a new credit and rebuild your credit card history. This will be beneficial for you to be eligible for getting a personal loan.

Alternative

Despite a number of credit card companies that will reject your credit card applications, there are a few credit card companies that are willing to accept your application.

Store Credit Card

You can use the store credit cards rather than the things that are supported by Visa or MasterCard. Additionally, this type of credit card does improve your credit score, if it is managed properly.

Secured Credit Cards

Paying a security deposit for a credit card usually scares off potential borrowers. However, borrowers with a low credit score can use this to avail a secured credit card. After a while, the credit card becomes unsecured.

Credit Card Unions

There are several unions that also provide us with credit cards. A credit union loan will also help you improve the credit card history.

In Conclusion

You may have a limited credit in the beginning due to the poor credit score. At the end of the day, you will have to sacrifice for improving the credit. Keep the goal to pay off your dues on time and focus on improving the credit card.

Furthermore, you need to work on improving the credit score. If you are unemployed, find a job to establish stability. Companies are legally restricted from providing unemployed individuals credit cards. So, you need to work on paying off the loans and clearing the credit. Improving the credit history is important and is possible after fixing the credit history. In the next step, you need to start saving to apply for a credit card. This will let the lenders know that you have enough money saved up to pay off the credit.