Bad Credit? No Problem!


You went through a rough patch, lost your job, had your house foreclosed on, and even had your car repossessed. However, in the last two years you moved cross country, picked up a new job that pays the bills, paid off a couple of delinquent accounts from when your old life fell apart, and feel like you are moving forward with life. There's just one problem, your credit score doesn't quite reflect where you're headed, only where you have been. If you have a credit score below 650 and think it's high time to rebuild your credit, there's a couple of credit cards that can help you.

There are quite a few different credit cards available, but the easiest to acquire with bad or limited credit is one with a security deposit. Don't call it a prepaid card, they don't want to be associated with a debit card or something like that, even though that is sort of what it is. You send in a deposit of three hundred to three thousand dollars and instantly have credit for that amount. See I told you it was like a prepaid card. Then over the course of a few months, you pay off the amount you used, even though they still have you security deposit. You can pay them to use their credit for the low low annual fee of one hundred dollars. What a bargain right? The only up side to this kind of “credit” card is that they report to all three major credit bureaus.   They do charge interest and you had better believe it's high. This is like having the opposite of a great bank account that pays you interest on the money in the account and having the benefit of a debit card. This card is only useful for reporting and nothing else.

Then there is a precious few credit cards for those with less than stellar credit that don't require a hundred dollar annual fee, or a security deposit. You shouldn't expect much more than that though. They have an annual fee anywhere from twenty-five dollars to ninety-nine dollars. They may also have account maintenance fees. The APR is usually high too, so expect to pay for the privilege of not having to plunk down a few thousand on a security deposit.   The credit lines are usually only three hundred to eight hundred dollars. It's a small step in the right direction on the path of building credit. Try to utilize less than ten percent of the card at any given time and pay on time all the time. After a couple months, your credit line will expand and you will have an improved credit score. This is a step in the right direction for building our credit with a card that doesn't completely suck.

Then there is a card that is perfect for everyone on a mend from bad credit. Capital One offers a card for every credit profile, including the folks with bad credit. This company is a big wig in the credit market, not some fly by night card shark, that is willing to lend you fifty till next week. They have a card where they charge a one time fee of up to two hundred dollars that can be paid off in installments. Then there is an annual fee of only twenty-nine dollars. Just twenty-nine dollars when all the other cards on the market are charging up to a hundred per year. The annual percentage rate isn't too shabby at twenty-two percent either. Also, they allow you to increase your credit line, past the security deposit eventually, which means “hey we kinda trust you.” The Capitol One card isn't the only credit card that treats bad credit customers right, but it is the easiest to work with.

There are also secured credit cards, which means you put a deposit down, that offer 1% rewards, no annual fee, and an APR of twenty-three percent. The rewards are miles and you get 1 mile per dollar spent. Some even offer five thousand miles for using the card with in the first month. That's not all, you can get up to five hundred thousand dollars in Travel Accident Insurance. This seems more like a travel debit card with perks than a credit card. Either way you look at it, it's a better deal than some of the secured credit cards that are available.

So even if you have had a few run-ins on your credit, maybe even a bankruptcy, it's not the end of the world. You can rebuild your credit with an actual credit card that will report your payments. This will leave a long and thorough history of not just your mistakes, but also the fact that you are trying to do right. After a year or two using your secured credit card, you can start looking into an unsecured card that is meant for those with fair credit. Before long, you will have a high credit score of 700 or more and you will be able to ditch the old secured card. Oh, the other good thing about a lot of secured cards, you can get your money back after you pay off the balance of what is owed. Talk about a great perk! How many pay day lenders, pawnshops, and such do that? Not many my friend, and that's why using a secured card is even better. You're only out the interest and annual fee as long as you pay on time every month. With the travel card, you might actually be able to offset the annual fee and interest with all the miles racked up. Imagine being able to suddenly drop in on the family one weekend over the holidays! What a great surprise for them and what a sweet reward for you, just for building your credit and staying on top of our finances. That's how it should be!