Should I Get More Than One Bad Credit Credit Card?

Applying for a credit card is an important decision. Each new application reduces your credit score slightly, and too much available credit increases the risk that your spending will get out of control and you’ll rack up more debt.

In spite of all that, there are good reasons to apply for bad credit credit cards. In some cases, there are even good reasons to apply for more than one.

Let’s look at the factors that should guide your decision.

Why apply for a credit card for people with poor credit?

If your credit score is below 630, you may not be able to qualify for a regular credit card. A credit card for people with bad credit may be the best bet—and that will often mean a secured credit card. These cards require applicants to pay a refundable deposit, an extra guarantee that you’ll pay off your balance.

Using a secured credit card helps you demonstrate that you can be trusted to pay your bills on time. Regular, responsible use of the card will gradually raise your score so you’ll eventually be able to apply for other cards, even the best credit cards out there.

Why would I want to apply for more than one card?

Credit cards for people with bad credit often have low limits, which can be challenging especially if you’re trying to increase your credit score. That’s because part of your score is determined by the percentage of your available credit that you’re using. For example, let’s say you only have one credit card, and it has a credit limit of $300. If you have a $150 balance on the card, you’re using 50% of your available credit—and that will hurt your score. Credit utilization should be below 30% if at all possible, which means using only $100 on a card with a $300 limit.

It gets even trickier than that. Because you don’t know when the three credit bureaus — Equifax, Experian and TransUnion — will look at your credit history, you can’t risk having your credit utilization ratio be above 30% at any point during the month. So even if you pay your entire balance off each month, you need to make sure not to charge more that 30% at a time or risk bringing your score down.

So additional cards may benefit you because they’ll increase your available credit and make it easier to make larger purchases and pay them off right away without dinging your credit score.

What’s the catch?

Every time you apply for a new card, your score slips by five points. Applying for a lot of cards in a short period of time makes lenders nervous, so be careful. If you’ve recently applied for a credit card for bad credit, don’t apply for another one right away—and don’t apply for cards you don’t need. More credit is not necessarily a good thing, partly because frequent credit card applications hurt your score and partly because it makes it too easy to overspend.

The bottom line

Don’t apply for more credit cards than you need and focus on using your cards in a way that builds your score. Credit cards are valuable financial tools, but only if you’re careful.

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How to Get an Unsecured Credit Card With No Credit History

You may have no credit, but that doesn’t mean you’re completely out of the running for an unsecured credit card. While good credit makes finding a credit card much easier, there are credit cards for people with no credit history.

A bank takes a certain risk with each credit card it issues. Your credit score and credit history are used in determining whether or not you are a good risk. With no credit, the bank doesn’t have much information to base their decision upon, so your options are limited.

Credit cards for no credit history

Secured credit cards are often offered as the most logical solution for people with bad or no credit. These cards require you to put a deposit down as collateral against the line of credit. If you fail to pay your monthly bill, the bank can use the deposit.

But there are some unsecured credit cards for people with no credit or bad credit. These cards will likely have higher fees and interest rates than other unsecured cards (those offered to people with good credit), but they won’t require an upfront deposit like a secured credit card. Read here for additional information on unsecured cards that are easy to qualify for.

Building your credit

Because you have no credit, managing your new card responsibly will have a major impact on your credit worthiness in the future. In other words, the habits you develop with this card now will determine your credit history. So use it wisely. Here are a few important guidelines for building healthy credit:

1. Always pay your bill on time.


2. Strive to pay off your balance in full each month to avoid sinking further and further into debt.


3. Don’t max out your card or keep the balance high. Ideally, you’ll want to keep your balance below 30% of your limit. Once you cross that threshold, there’s a chance of negatively impacting your credit.


4. Check your credit report and credit score before getting your new card and periodically after you’ve established credit.


5. When it’s time to move on to a better credit card with lower rates and fees, think hard before canceling older cards. Part of your credit score is based on the length of your credit history. So an open account in favorable standing does more for your credit than closing it out.

---

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The post How to Get an Unsecured Credit Card With No Credit History appeared first on NerdWallet Credit Card Blog.

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Should I Get More Than One Bad Credit Credit Card?

Applying for a credit card is an important decision. Each new application reduces your credit score slightly, and too much available credit increases the risk that your spending will get out of control and you’ll rack up more debt.

In spite of all that, there are good reasons to apply for bad credit credit cards. In some cases, there are even good reasons to apply for more than one.

Let’s look at the factors that should guide your decision.

Why apply for a credit card for people with poor credit?

If your credit score is below 630, you may not be able to qualify for a regular credit card. A credit card for people with bad credit may be the best bet—and that will often mean a secured credit card. These cards require applicants to pay a refundable deposit, an extra guarantee that you’ll pay off your balance.

Using a secured credit card helps you demonstrate that you can be trusted to pay your bills on time. Regular, responsible use of the card will gradually raise your score so you’ll eventually be able to apply for other cards, even the best credit cards out there.

Why would I want to apply for more than one card?

Credit cards for people with bad credit often have low limits, which can be challenging especially if you’re trying to increase your credit score. That’s because part of your score is determined by the percentage of your available credit that you’re using. For example, let’s say you only have one credit card, and it has a credit limit of $300. If you have a $150 balance on the card, you’re using 50% of your available credit—and that will hurt your score. Credit utilization should be below 30% if at all possible, which means using only $100 on a card with a $300 limit.

It gets even trickier than that. Because you don’t know when the three credit bureaus — Equifax, Experian and TransUnion — will look at your credit history, you can’t risk having your credit utilization ratio be above 30% at any point during the month. So even if you pay your entire balance off each month, you need to make sure not to charge more that 30% at a time or risk bringing your score down.

So additional cards may benefit you because they’ll increase your available credit and make it easier to make larger purchases and pay them off right away without dinging your credit score.

What’s the catch?

Every time you apply for a new card, your score slips by five points. Applying for a lot of cards in a short period of time makes lenders nervous, so be careful. If you’ve recently applied for a credit card for bad credit, don’t apply for another one right away—and don’t apply for cards you don’t need. More credit is not necessarily a good thing, partly because frequent credit card applications hurt your score and partly because it makes it too easy to overspend.

The bottom line

Don’t apply for more credit cards than you need and focus on using your cards in a way that builds your score. Credit cards are valuable financial tools, but only if you’re careful.

---

Image via iStock.

The post Should I Get More Than One Bad Credit Credit Card? appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1r3WN35

Read More

How to Get an Unsecured Credit Card With No Credit History

You may have no credit, but that doesn’t mean you’re completely out of the running for an unsecured credit card. While good credit makes finding a credit card much easier, there are credit cards for people with no credit history.

A bank takes a certain risk with each credit card it issues. Your credit score and credit history are used in determining whether or not you are a good risk. With no credit, the bank doesn’t have much information to base their decision upon, so your options are limited.

Credit cards for no credit history

Secured credit cards are often offered as the most logical solution for people with bad or no credit. These cards require you to put a deposit down as collateral against the line of credit. If you fail to pay your monthly bill, the bank can use the deposit.

But there are some unsecured credit cards for people with no credit or bad credit. These cards will likely have higher fees and interest rates than other unsecured cards (those offered to people with good credit), but they won’t require an upfront deposit like a secured credit card. Read here for additional information on unsecured cards that are easy to qualify for.

Building your credit

Because you have no credit, managing your new card responsibly will have a major impact on your credit worthiness in the future. In other words, the habits you develop with this card now will determine your credit history. So use it wisely. Here are a few important guidelines for building healthy credit:

1. Always pay your bill on time.


2. Strive to pay off your balance in full each month to avoid sinking further and further into debt.


3. Don’t max out your card or keep the balance high. Ideally, you’ll want to keep your balance below 30% of your limit. Once you cross that threshold, there’s a chance of negatively impacting your credit.


4. Check your credit report and credit score before getting your new card and periodically after you’ve established credit.


5. When it’s time to move on to a better credit card with lower rates and fees, think hard before canceling older cards. Part of your credit score is based on the length of your credit history. So an open account in favorable standing does more for your credit than closing it out.

---

Image via iStock.

The post How to Get an Unsecured Credit Card With No Credit History appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1r3WMMs

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Common Credit Card Application Mistakes

When you apply for a credit card, you hope to be approved. But making common mistakes on credit card applications can earn you a denial right off the bat. Knowing what you’re up against before you fill in the blanks will help ensure you have the best shot at getting the credit card you want.

Credit card application mistakes are most detrimental for people with no credit history or those with bad credit. People with good to excellent credit rarely worry about these errors because they are not used to denials. Fortunately, you can improve a less-than-desirable credit history by approaching credit management and the application process with these potential mistakes in mind.

Lying

Credit card applications ask for your income, your account balances, employment status and even your monthly housing expenses. Fudging these numbers could give you access to more credit, but lying on a credit card application is considered fraud. Credit card fraud can carry significant penalties, including prison time — hardly worth the potential payoff of a higher credit limit.

Applying for too many cards too quickly

When your credit card application is denied, it’s tempting to fill out another and another. But too many credit inquiries can hurt your credit score and further increase the likelihood that you’ll be denied again. Instead of applying for credit cards en masse, choose one and wait at least six months before filling out another application.

Failing to read the fine print

Know what you’re getting into before you apply. Don’t accept the first credit card offer in your mailbox; instead look for the right credit card for your needs. Make sure you consider interest rates, annual fees and various rewards programs. Also, do some research on how easy or difficult it is to get a specific card. Applying for a credit card for people with excellent credit could be an exercise in futility if you have a less than stellar credit history.

Not considering a cosigner

If you go into the credit card application process knowing you might be denied, you should consider a cosigner. A cosigner essentially vouches for your creditworthiness and stands to take the fall if you fail to make your payments. But having a cosigner with good credit will increase the likelihood of an approval. You’ll want to find someone with whom you have a good relationship and make every effort to keep the credit card in good standing if approved, because you aren’t the only one with your credit on the line.

We all make mistakes, but the wrong move when applying for credit could cost you for years to come.

---

Image via iStock.

The post Common Credit Card Application Mistakes appeared first on NerdWallet Credit Card Blog.

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5 Things To Do With Mail Credit Card Offers

You may have noticed an uptick in the number of credit card offers you’ve received in your mailbox this year. Direct-mail marketing for cards was expected to increase in 2014 as recession recovery continues.

But before you go hog wild and sign up for all the credit cards you get offers for, examine the offer to see if its claims hold up.

1. Read the fine print.

Mail credit card offers are essentially advertisements, so read them carefully. Here are some things to look for:

• Annual Percentage Rate (APR): The yearly interest rate you will pay on your credit card balance. Generally, the better your credit is, the lower your APR will be. Look for offers that give you the lowest APR Avoid paying interest at all by paying off your balance completely each month.


• Annual fees: Some cards charge yearly amounts simply for having them. Look for cards with low or no annual fees.


• Credit limit: The maximum amount of money you can charge to a credit card. It’s normally determined after you apply, but some mail offers list minimum credit limits in the ad.


• Penalty fees: These include late fees, over-the-credit-limit fees and more. As with all fines, you want to avoid high ones.

2. Is it a pre-screened offer?

Many mail credit card offers advertise that they’re “pre-screened” or “pre-approved.” This means the issuer bought your credit information from one of the three main credit bureaus – Equifax, Experian or TransUnion – and determined that you fit the minimum requirements for the card. Being pre-approved doesn’t affect your credit score until you apply for the card and doesn’t guarantee that you will be approved.

3. Apply if you’re interested.

If the card seems like a good fit for you, apply for it. The issuer will check your credit report and decide whether to approve you. A word of caution: Don’t apply for every card offer you receive. Applying for multiple cards in a short time frame can hurt your credit score.

4. Shred the mail offer.

Whether you decide apply for the card, shred the physical mail offer. It may contain personal information that identity thieves can swipe from your recycling bin and use against you.

5. Opt out.

If you’re tired of seeing credit card offers in your mailbox, call 1-888-5-OPTOUT or visit http://ift.tt/VQQvy8 to remove your name from mailing lists permanently or just for five years.

The Takeaway: Direct mail offers can be a good way to learn about a particular credit card, but you should always do extra research to understand exactly what the offer entails before you apply.

The post 5 Things To Do With Mail Credit Card Offers appeared first on NerdWallet Credit Card Blog.

Source Article http://ift.tt/1y39EC7

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Common Credit Card Application Mistakes

When you apply for a credit card, you hope to be approved. But making common mistakes on credit card applications can earn you a denial right off the bat. Knowing what you’re up against before you fill in the blanks will help ensure you have the best shot at getting the credit card you want.

Credit card application mistakes are most detrimental for people with no credit history or those with bad credit. People with good to excellent credit rarely worry about these errors because they are not used to denials. Fortunately, you can improve a less-than-desirable credit history by approaching credit management and the application process with these potential mistakes in mind.

Lying

Credit card applications ask for your income, your account balances, employment status and even your monthly housing expenses. Fudging these numbers could give you access to more credit, but lying on a credit card application is considered fraud. Credit card fraud can carry significant penalties, including prison time — hardly worth the potential payoff of a higher credit limit.

Applying for too many cards too quickly

When your credit card application is denied, it’s tempting to fill out another and another. But too many credit inquiries can hurt your credit score and further increase the likelihood that you’ll be denied again. Instead of applying for credit cards en masse, choose one and wait at least six months before filling out another application.

Failing to read the fine print

Know what you’re getting into before you apply. Don’t accept the first credit card offer in your mailbox; instead look for the right credit card for your needs. Make sure you consider interest rates, annual fees and various rewards programs. Also, do some research on how easy or difficult it is to get a specific card. Applying for a credit card for people with excellent credit could be an exercise in futility if you have a less than stellar credit history.

Not considering a cosigner

If you go into the credit card application process knowing you might be denied, you should consider a cosigner. A cosigner essentially vouches for your creditworthiness and stands to take the fall if you fail to make your payments. But having a cosigner with good credit will increase the likelihood of an approval. You’ll want to find someone with whom you have a good relationship and make every effort to keep the credit card in good standing if approved, because you aren’t the only one with your credit on the line.

We all make mistakes, but the wrong move when applying for credit could cost you for years to come.

---

Image via iStock.

The post Common Credit Card Application Mistakes appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1zCcL6h

Read More