People often wonder if there are unsecured cards being offered to people who have bad credit rating. An unsecured card as opposed to a secured card simply means that it is a conventional credit card that does not require you to make a security deposit as collateral to get approved for the credit card.
There are certainly some credit cards providers that offer unsecured credit cards for bad credit. These credit cards work in the same manner as a conventional credit card where you have the ability to spend on credit and pay off the balance at the end of the month or revolve it over the next few months.
Even with credit cards for bad credit rating there is a limit to how low the credit score of a person can be in order to qualify. If your credit score is shot beyond this point then you will not be would qualify.
It is getting increasingly difficult to get credit on a bad credit rating. You will usually need to off set this by showing proof of income, a good history with your savings account or having someone else with a good credit history to cosign with you on the credit card application.
People with a sub-prime credit rating can qualify for a bad credit card which are specifically meant for people with low credit score. These cards typically have a low credit limit and a high interest rate. This means that you’ll pay a higher cost for revolving your balance. This is the primary incentives for companies the credit card companies. By charging are heavy rate of interest they stand to make more money as well as to cover the additional risk of lending to a person with sub-prime credit rating. The low credit limits on these kind of credit cards and shows that the consumer does not get himself under a large amount of debt and also reduces the amount of risk that the creditor takes in providing the consumer with a sub-prime rating credit card. However, since credit card debt is the commonest kind of debt and is unsecured, credit card companies are still vary about giving them to people with a shaky credit history.
But getting yourself a credit card and using it wisely is recommended to someone with a bad credit rating because the benefits to your credit history are the same as for anyone else. Like using any other and secured credit card you will have the opportunity of improving your credit rating. Credit card lenders usually report to at least one of the three major national credit bureaus Equifax, TransUnion and Experian.
By making timely payments on your credit card you will build a credit history and improve your credit rating overtime which may result in you qualifying for a lower rate of interest and higher credit limits on your credit card in the future.