If you are trying to rebuild your personal credit, you can use a new credit card to raise your credit score at a faster pace. There are actually different types of credit card that are especially designed for repairing bad credit. In this article, let’s take a look at a number of bad credit credit cards and the specific features of each one.
Secured Credit Card. The secured credit card is probably the most popular type of credit card for bad credit. This credit card requires a security cash deposit which can range from $300 to $500. The amount of deposit will also determine the range of the credit line so if you want to enjoy higher limit, be prepared to submit higher deposit.
Unsecured Bad Credit Credit Card. Today, you can find issuers that offer unsecured credit cards especially for bad credit. Although no deposit is required, people with bad credit history or a low credit score can still qualify for this account. However, the interest rate and the fees are expected to be much higher than a standard credit card.
Prepaid Credit Card. Anyone can easily acquire a prepaid credit or debit card, regardless of credit rating. However, unlike other types of bad credit credit cards, a prepaid debit card does not provide its holder with a credit line. In order to use the card for payment, the cardholder must make a deposit into the debit account. Once the balance runs out, the cardholder must make a new deposit to be able to use the prepaid card for new transactions.
Department Store or Gas Credit Card. People who have been through a bankruptcy may find it difficult to get approved even for a bad credit credit card. To slowly improve credit score, you may begin by acquiring a department store card or a gas credit credit card from your preferred merchant. These credit cards can only be used for payments from one particular merchant or company. Typically, the cardholder can charge purchases to the account and pay the charges in full each month.
Use Your Credit Card to Improve Credit
One you have decided which bad credit credit card suits you best, it’s important to do your research first before making a choice. Make sure that your chosen issuer reports to the three major credit bureaus (Experian, Equifax, TransUnion) as it is the only way you can improve your credit score.
The key to rebuilding bad credit is to show creditors that you are capable of managing debt and credit effectively. Your payment history will therefore be a major factor. Keep in mind that 35% of the FICO score is based on payment history. Another significant factor is how you use your credit limit. 30% of the FICO score is based on credit utilization. According to financial experts, credit usage must be kept minimal to maintain good credit. Thus, to boost your personal credit score, you need to be consistent with your payments and discreet with how you use your credit limit.
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