Are you thinking of applying for a personal credit card but have bad credit? Truth is there are many types of cards that suit you. However, because of the bad credit, you may be inconvenienced by the higher rates of payments, lower credit limit, or restricted use. The following are issues to consider prior to making your application:
1. Why Are You Applying For The Credit Card?
People apply for credit card for different reasons. Some do it to consolidate other credit cards; others want to rebuild their credit, while some want to use it on shopping. So, why do you need it? Is it for making purchases, or rebuilding your credit score? If your other cards are already taking nearly 30% of the limit, then the best approach is to consolidate all the cards into one.
2. How Many Loans AND Credit Cards Have You Applied For?
The common notion is that the more cards you apply, the more likely you will get one. However, mass applications may actually harm your approval. Analysing the credit card takes as much as 10% of the total score. A provider will have reason to believe that you applied for many other credit cards without success.
3. Have Your Spending Habits Changed?
Maybe you allowed the outstanding payment become overdue, or you regularly exceeded your line or credit limit. Before applying for another personal credit card, it is important to take a look at your spending habits. You should have put in place measures that will help you stick within the recommended limits, and also making sure you repair your bad repayment history.
4. Do You Have Too Many Subprime Loans?
Before making your application, you need to go through your credit report to verify how many subprime lenders are listed. Credit card companies pay attention to the kind of creditors you transact with. Having too many subprime lenders affects your credit mix, and lowers your credit worthiness. They may think twice before approving your card as they see you more of a risk or liability.
5. Have You Co-signed A Loan?
If you have co-signed a loan to a friend, family member, or anyone else, you first need to find out whether the person is paying on time. Many people get shocked when their credit score dips even when they are maintaining it. Normally, a credit card company only calls a defaulter after 90 days have elapsed. And since you were a co-signer, then the missed payments will negatively affect your credit score.
Having bad credit doesn’t mean that you can’t qualify for a credit card. In fact, with a bit of research, you will be able to locate a good service provider. Nonetheless, unlike in the ordinary credit card, you may be required to pay higher interest rate, or will qualify for a lower amount. Besides accessing credit, you can also use the personal credit card to rebuild your credit.