Using A Bad Credit Credit Card To Repair Your Credit
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Use a credit card to get you out of the mess caused by credit cards? If youre trying to spiff up a damaged credit history, bad credit credit cards may hold part of the key. The trick is all in choosing the right credit card and using it wisely.
Your credit report is a listing of all sorts of information about you, including when and how you pay your bills, if youve got overdue accounts, if you have a history of defaulting on loans and if its safe to trust you with borrowed money. On the flip side, it also can show that you handle money responsibly, that youve paid off debts and that you are a fine upstanding citizen who pays accounts off on time and properly. Bad credit credit cards can help you change the image that your credit report reflects - as long as you actually use them appropriately.
Why a bad credit credit card? Obviously, if you qualify for a low interest credit card, you wouldnt need to be reading this, would you? If youve had trouble qualifying for credit cards from most lenders, though, there are credit cards designed for people with spotty, stained or downright tattered credit. In some cases, you may have to go so far as applying for a secured credit card - where you deposit 1-2 times the amount of your credit limit into a bank account as collateral - in order to get a credit card that you can use - but the results are worth it. Heres why.
One feature that most bad credit credit cards share is their reporting habits. Most credit card companies only make reports to the credit bureaus when you miss payments or are late on them. Credit cards that are marketed as credit repair cards, on the other hand, often report every payment that you make, and label your account in good standing in your credit report.
This is important if youve had credit troubles in the past. While many bad credit reports will stay on your credit record for up to six years, the further in the past they are, the less theyll count with prospective creditors. If you had a bad spot of trouble four years back, but your credit report now shows two years of regular, on time payments to a credit card company, the picture that emerges is of a regular person who had a tough time, but has since recovered and is paying their bills on time. Thats even better an outlook than a person who had a spot of trouble four years ago, and hasnt used credit since.
Obviously, youll pay a bit more for your credit card than if you had spotless credit. Bad credit issuers are taking a bigger risk by giving credit cards to those who have credit trouble in their pasts. To offset that risk, theyll charge higher interest rates, and quite possibly membership fees and service charges. That doesnt mean, though, that youre stuck paying a fortune in unreasonable fees and rates. If you shop carefully, youll find companies that arent taking advantage of your vulnerability by tacking on outrageous fees. You can compare bad credit credit cards and other types of credit cards at moneyeverything.com, where youll find a full selection of the best credit card offers available in the UK today.
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