How to Get a Credit Card Even if You Have a Low Score
You have poor credit. Maybe a series of delinquent invoices are keeping you up at night. Perhaps you’ve defaulted on a school loan or filed for bankruptcy in the past decade.
All of the following can make getting approved for a large credit card difficult, if not impossible.
However, you may be declined for a large credit card for other reasons besides your credit score. Indeed, some folks have never had a credit card. Some people may have no credit history if they prefer to pay cash for everything, have never financed a vehicle, and have never applied for a student loan or a mortgage. If this is the case, most credit card issuers will reject your application not because of your credit score but because you don’t have one.
If a young woman gets married and puts all of her debts in her husband’s name, she may find herself with no credit history if she ever loses her husband or gets divorced. Thousands of women have had loan and credit card applications rejected for this reason.
And yet, there are those whose debt loads make them an unacceptable investment prospect. You probably won’t be approved for a new credit card if you already have several outstanding loans (such as a vehicle loan, a student loan, a mortgage, or two or more — out of cards).
However, a credit card can still be obtained in the abovementioned scenarios. You may get a VISA or Mastercard with a limit of up to $5,000 if you know the right firm to call and how to complete your application, regardless of how bad your credit is or whether you have ever filed for bankruptcy.
Later in this study, we’ll discuss the specific card issuers and how to apply for a VISA or Mastercard, but first, there are a few other things you should know about credit cards that are crucial to your financial well-being.
One’s Credit Score
What factors determine whether you are an excellent or terrible credit risk when applying for a credit card? So, you might say it’s a Big Brother thing. Many huge American organizations keep tabs on the borrowing and spending habits of virtually every citizen who has taken out a loan.
These are the four most prominent credit rating firms:
Telephone: 800-392-7816 CSC Credit Service
Contact TRW Information Sys. at (800) 392-1122.
To contact Equifax, dial (800) 685-1111.
(800) 851-2674 Trans Union Corporation
When you apply for a credit card, the issuer will contact one of the bureaus above to see if they have a record of any past-due payments or collections on your behalf.
If you have never taken out a loan or utilized credit, your name won’t appear in any of the databases above. If you have, then there is probably data about you. That information will be public record if you have ever missed a payment or refused to pay a debt. Even if you have never missed a payment on a loan but are consistently late, this might negatively impact your credit score.
Error Proportion of 25%
Most people would agree that this sounds a lot like Big Brother. It’s unsettling to realize that a faceless multinational organization keeps tabs on your personal information. To add insult to injury, they will give your information to any bank that requests it. That’s the cost of getting a credit card. The adage goes, “There ain’t no such thing as a free lunch.”
Regarding the credit game, there is no such thing as a free lunch, either monetarily or regarding your independence.
Adding insult to injury, almost a quarter of all credit reports contain mistakes. Right now, inaccurate information about you could be destroying your credit.
Call the numbers I gave you above to the credit reporting companies to see if there are any mistakes on your report. You must request a copy of your credit report via formal communication, such as a letter. You can request a copy of your data, and they will deliver it.
The interest rates credit card corporations charge are where the real money is made.
Rates of Interest
Credit card interest rates of today were illegally high just a few decades ago. Laws have long prohibited what is known as “usury,” or highly high-interest rates. Only 30 years ago, any banker who loaned money at 20% interest would have been sent to jail. Loan sharks and mafias monopolized such interest rates.
However, this is a routine procedure. Rates on specific credit cards are close to 21 percent. Companies like Apple Computer provide incredibly high-interest rates on their credit plans.
Many credit card issuers entice new cardholders with introductory interest rates as low as 5 percent. However, the interest rate increases again after six months, only disclosed in the fine print that few people read. The introductory interest rate of 6% on many cards quickly rises to 18% or higher. Most folks have already tallied up their balance and are trapped by that point. The vast majority of customers never even realize their rate has increased. Financial institutions count on this fact. They’re into people who don’t care about the finer points. They’ll keep an eye on you and your money if you’re not careful, then steal it subtly.
Cards with No Annual Fees
Some credit card issuers don’t charge you an annual fee to use the card. The yearly cost is between $18 and $55. You pay the fee yearly for the exclusive right to use the card. No annual fee is required from other businesses. As a result, you might conclude that this is a better offer. They typically aren’t. A higher interest rate is typical for cards without an annual fee. You will always pay more in interest than the yearly fee if you carry a balance from month to month. The only way to take advantage of a credit card without an annual charge is to never have a balance from month to month.
Advantages and Benefits
Offering benefits like frequent flyer miles or yearly rebates is one sneaky technique. Get X bonus frequent flyer miles after spending Y on the card. Put your card’s usage toward the down payment on a car. Is it a fair price? Rarely. The rebates and freebies are a ploy to get you to agree to pay extremely high-interest rates. You won’t get much use out of a deal like this unless you have a high spending capacity and do a lot of traveling.
Said you should constantly evaluate interest rates before committing to a credit card. Comparison shop. The credit card industry is as cutthroat as any other market segment. That means interest rates will be all over the place. Avoid credit cards with interest rates that are five percentage points over the market rate.
How to Reduce Your Interest Payment
What if you already have a significant balance on a credit card that charges an excruciating interest rate? Get tough and call the credit card company right now. It’s usually as easy as asking for a reduced interest rate and getting it.
You can use the threat of transferring your balance to a different card issuer with a lower rate as an additional incentive. Many credit card firms would jump at the chance to have you as a customer and even be willing to buy out a rival company. Naturally, this makes you dependent on them. In that case, a lower interest rate is acceptable.
Credit Card Application Process Explained
Let’s talk about the “hopeless cases” among you. What if you have a terrible credit score or none at all? Six different credit card companies may have rejected you. To what effect?
You should give some serious consideration to why you want a credit card before you even apply for one. A credit card can be the last thing you need if you have a history of credit problems. Credit cards and the debt they encourage are sometimes viewed as a new type of servitude.
Credit cards possess an almost magical quality of allure and deception. They pull at the most primal part of our psyche, making us feel like we’re getting something for free when spending two, three, four, or even ten times as much because of the interest we’ll have to pay on each purchase.
However, it’s increasingly impractical to do without a credit card in today’s America. Without a credit card, car rentals are out of the question. Cash is risky to carry around. Unfortunately, not all establishments accept checks, and exploring a new city or country can be challenging without the security and anonymity that a credit card provides.
Secured Credit Card
A secured credit card is your best bet if you’ve had credit troubles in the past but are determined to build credit in the future. Secured credit cards are available even to those who have filed for bankruptcy.
To obtain a secured credit card, you must first make an initial cash deposit, often between $200 and $2,500, with your bank or the card issuer. The credit of up to 150% of your initial investment may be extended to you by the card issuer. If you put up $500, we’ll provide you with a credit limit of $750. A $1,000 down payment will net you $1,500 in credit, and so on.
While your deposit funds are being held as security by the bank or card company, you will receive a handsome 4 to 5 percent interest. The deposit money gives the lender some peace of mind. The lender retains the cash if you don’t pay your credit card bill. They still have the danger of making a net loss, but it’s much smaller.
If you have a monthly balance, the interest you earn on your deposit will cancel it out. The 5 percent return on your prepayment makes a secured credit card’s 18 percent interest rate seem more reasonable.
When it comes to secured credit cards, which banks do you recommend?
(At the time of publication, the preceding information was accurate. If the numbers change, you can find the businesses in the Yellow Pages or by internet search.
At Citibank, you may earn 4% on deposits as low as $300.
The Federal Home Loan Bank — The minimum to get 2.5% on your deposit is $250.
To the Orchard Bank, There is a 4% return on a minimum deposit of $400.
Essential Federal – With a $300 minimum, you can make between 4% and 5% on your money.
The Signet Bank – – The lowest amount required to earn 5% is $200.
Responsible use of a secured credit card over the years can also aid in restoring a damaged credit history.
A secured credit card is a good option for anyone who wants the security and convenience of a credit card but may not yet have adequate credit. Secured credit cards allow you to exercise fiscal restraint reasonably and earn interest on your deposit.