Bad Credit Credit Card – What You Need to Know
I think there may be a little bit of confusion about exactly what a bad credit credit card is. First and foremost, I think it would be a good idea to break down exactly what qualifies as bad credit.
The credit histories that we attain are a snapshot of how we have handled the credit that has been extended to us. The information is gathered and reported by the three major credit bureaus which are TransUnion, Experian and Equifax.
The three major credit bureaus assign a three digit credit score ranging from 850 to 300. The higher the score, the more creditworthy the individual is. An excellent credit score is one that is 720 or above.
Anything below 620 is considered to be subprime. Subprime means that those individuals will have to pay a higher interest rate on credit. In many cases, they will not qualify for credit at all depending upon how poor their credit rating happens to be.
A bad credit credit card, also known as a secured credit card, is an alternative that the consumer has when they cannot qualify for an unsecured card. There are several advantages to using a secured card which we will take a look at now.
First and foremost a secured card is so called because in order for the applicant to receive it they must pledge collateral. In most cases the amount of credit extended to them initially will equal the amount of money they have submitted to set up their account.
Over time as they prove to be responsible with their credit, the limit will be increased gradually. Another advantage of having a bad credit credit card is that they report the cardholder’s payment activity to the three credit bureaus.
This means that when the account holder responsibility manages their line of credit they will be rebuilding their credit rating. Ultimately the goal should be to raise their credit score high enough so that they will no longer need a bad credit credit card and will qualify for an unsecured card.
Leading issuers of secured cards include Applied Bank, Public Savings Bank and New Millennium Bank. Take a look at the features and benefits of each and be sure to pay attention to such things as setup fees and annual fees. Remember to carefully study the terms of the offers before you apply.
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