It is difficult to qualify for a credit card from major credit card providers such as VISA, MasterCard and Discover when you have a bad credit rating. Many consumers will feel disheartened or think impossible to get a credit card when they have a bad credit rating. However, certain credit card companies have decided to relax their strict criteria for qualifying for a credit card owing to the increasing number of sub-prime borrowers. The number of people who have a suffering credit has increased owing to the worsening economic situation in the country. There are also those companies who have started providing credit cards to people with a sub-prime credit rating by specializing in bad credit cards.
Every credit card that is tailored to people with a bad credit rating can be expected to have certain features which are not wholly advantageous to the consumer.
Bad credit cards meant for people with a poor credit rating usually have:
Very High Rate of Interest
Lower spending limit and Credit Limit.
Strict monthly income requirements.
High processing fee and annual charges.
In spite of all these negative features attached to a bad credit card, using such a credit card can be made to work out to the advantage of the sub-prime borrower. The higher rate of interest will not affect you very much if you pay down your balance at the end of every month. A main benefit that you will gain of using a credit card is a chance to rebuild your credit rating. Even though it is a card meant for sub-prime borrowers the usage of the card is most likely to get reported to the three national bureaus Experian, Equifax and TransUnion. Once your regular payment history and transactions is reported you will start to build your credit history and increase your credit score gradually.
Another advantage of using a bad credit card is that you can qualify for it quickly. Most of these credit cards are offered as part of instant approval credit cards that you can apply for instantly by filing an online application. Instant approval credit cards for people with sub-prime credit rating present you with the approval results within 60 seconds of making the application. This removes the waiting period of days, weeks and even months when you are uncertain of whether or not you will qualify. People even tend to make several applications for a credit card during the time that are waiting for an answer from one credit card application. This result in a generation of lot of credit Inquiries into the credit report which further damages the credit rating.
Even bad credit cards have a limit on the credit score they will consider for approval. If your credit rating is so bad that you cannot qualify for bad edit card then you are better of trying to use a prepaid credit card or a secured credit card. Secured credit card is more advisable to use because it will get reported to the credit bureaus and will serve to improve your credit history as long as you use it well.
Having a credit card even when you have difficulty in qualifying for one is worth the effort because certain transaction in today’s time and date are not possible without a credit card such as reserving hotel rooms, renting cars and online purchases. A credit card is an important tool for building credit history as well as expanding the purchasing power of a person.
You should remember that since poor spending habits were most likely reason behind your current credit situation, you should exercise care and caution in using a credit card even if it is a credit card meant for sub-prime borrowers.