It doesn’t take too much to get bad credit. All it really takes is one bill you didn’t expect. You pay that bill and suddenly you don’t have enough to pay the next bill, and then the next, and so on. After a string of financial trips, all because of that unexpected expense, you can find that your credit record has taken a number of dings. These dings will translate to a lower credit rating.
Once your credit rating has dropped you’re going to notice you have a harder time getting any type of line of credit, including credit cards. When you apply for a credit card, the company will go to your credit report and see if you are considered a good or bad credit risk. A low credit rating and a number of dings will put you in the bad credit risk category. Unfortunately, the credit card companies don’t seem to understand it can be a one-time problem that sent your credit rating down to the dumps.
So what can you do? Are you going to have to live without a credit card just because you’ve had a round of bad credit? No. There are bad credit credit cards out there. These are cards that are made just for people who have hit a couple of credit snags on their road. There are two types of bad credit credit cards:
Pre Paid – These are cards that you will have to ‘charge’ before you can say ‘charge it’. In much the same way that you have to pay in advance to charge a gift card before you can give it to someone to spend you will have to put money on this prepaid credit card that can then be deducted from your account when you make a purchase.
Full Credit Cards – These operate like regular credit cards but generally have a low limit for those with bad credit.
Bad Credit Punishment
There are a few things that are a bit different about bad credit credit cards than regular cards. They don’t offer nearly as much in the area of perks as regular credit cards. You are also going to notice the interest rates are much higher than for regular business cards. While many think this is punishment for having bad credit, it is really just the credit card company letting you know they believe you are a risky customer and they are going to charge you a higher rate as a way to make up for the risk they are taking.
Improving your Credit
Once you have a bad credit credit card, it’s time to use it to do some good. Don’t go shopping like you regularly do with them. Instead you need to carefully use this card to not only pay a bill or two but also to improve your credit so you will be once again eligible for better cards. Make sure you always make your payments on time and try to pay in full every month. These fiscally responsible actions will slowly increase your credit score and get you back on better financial playing grounds.