Using Bad Credit Cards to Help Restore Your Credit
If you have bad credit, you may be thinking there is no way you are ever going to be able to get a credit card in your name again. While this may seem the case if you are trying to go through regular credit card channels, there are other paths to take to restore your credit, and get a credit card.
Have you heard of bad-credit credit cards? These cards are specifically for those who have bad credit as they try to clean up their credit record.
There are two ways to go with bad credit credit cards, secured cards or unsecured cards.
Secured credit cards for bad credit are much like having another bank account. You will put money on the card, essentially charge the card with cash, and then be able to use it until the money is gone. You will then refill the card with cash to use it again. While this seems as if it is no different than paying cash, it is in the eyes of credit companies. The way this transaction comes out in the financial world is that you made a purchase on the card and the card account was paid on time. They are not paying attention to the fact that you had to put money in the account to begin with. To the credit bureaus, it looks as if you are being responsible with your credit card and that can help boost your credit score.
Unsecured credit cards for bad credit are like regular credit cards but with much higher interest rates. The thought behind the companies that issue these cards is they are going to give you a chance to prove you can actually pay your debts, but they are also going to charge you substantially for this, with high interest rates due to your risk status.
There is nothing wrong with using these cards, as long as you use them wisely. Having a card to use is half the battle in restoring your credit. By making small charges on this card, and paying them off on time, you will be able to boost your credit rating. The important thing to remember is that interest can stack up quickly on this type of card so you should not charge more than you can comfortably pay in a month.
No matter which type of bad credit credit card you choose the important thing to remember is to use it wisely. This credit card is your first step towards a larger goal of regaining good credit. You need to make sure only to charge what you can pay, or what is already prepaid, on the card. Keep your payments current, and eventually your credit score will reflect your better spending practices and other, more favorable, credit opportunities will come your way.