If you recently have gone through a divorce or other personal financial crisis that has caused severe damage to your credit, you may find that you are now being denied on all your credit card applications.
Since every new application decreases your credit score and your chances of rebuilding your credit, your best bet now is guaranteed approval credit card offer.
Here’s our guide to guaranteed approval and second chance offers.
You may not even need any of the second chance credit cards if your credit is not as bad as you think it is. It is best to check your score first, so you have an idea of how you should proceed. If you have bad credit, which is a score below 629, then yes, you most likely will have the best luck with a secured card. However, fair credit is a score between 630 and 689, which may be high enough to qualify for an unsecured credit card.
Any score that is 690 and above should be able to help you qualify for an unsecured low interest rate credit card. Understanding how these scores are calculated and how they affect your creditworthiness is a great start to rebuilding your own personal credit. After all, you simply cannot fix what you do not completely understand.
The entire idea behind secured credit cards, is that you can receive a credit card to use that will help you build your credit back up. This way, after using your new credit card in a responsible manner for a year or more, you may be eligible for an upgrade to a card that is unsecured with no deposit required.
Until then, you may have to send in an initial deposit that could range anywhere from $49 to $300 depending on the company you are applying through. A great card to consider for this would be that of the Capital One Secured MasterCard. This card will give an initial credit limit of just $200, but after five months of paying on time, they will review your account to see if you are eligible for a credit increase. They also report your status each month to all three of the major credit bureaus. Even better, there is no annual or monthly fee with the Capital One Secured MasterCard.
Another reputable option would be the Primor Secured Visa Gold Credit Card, although this one is going to require a minimum deposit of $200 and there is an annual fee of $49. However, there are no monthly fees. The amount of your credit line will be determined by the amount of your initial deposit and your creditworthiness. This is a guaranteed card that you can obtain with no processing fee required.
It is important to read all the fine print because there are some guaranteed credit cards that will have processing fees and monthly maintenance costs that you will be responsible for.
The Total Visa credit card is an example of an unsecured card that is easy to get with a bad credit.
The card is a great first step in rebuilding your credit, though they charge a one-time $89 processing fee for your credit card account to be fully set up.
If you want guaranteed credit to help rebuild your score, but prefer to stay away from traditional secured cards, you can check out store credit cards.
Store cards are usually much easier to get approved for, but also have their limitations. One of the biggest drawbacks of such cards is their limited acceptance – usually they can be used in one store chain only.
A good example is the Emporium card. This is a line of credit that will be specifically used for one online store. This will help you focus your spending habits on certain things instead of just having a card that you can use on anything anywhere and for any silly reason, such as buying beverages at the gas station.
You are given a line of credit, and you can either make timely payments according to the terms outlined for the items purchased, or you can take advantage of their early payoff option. The Emporium card issuer does report to all three major credit bureaus every month, so if you are making timely payments, you should notice an increase in your credit score over time.
Many of these options can be applied for online. The requirements will vary from one card to the next, but as standard practice, many need you to have a checking account and a verifiable source of income. You can complete your credit application and receive an approval in just a few short minutes. Of course, if an initial deposit is required, the credit is not actually extended to you until you send in that deposit. Once the issuer receives your deposit, they will process your account and send your credit card to you.
A good approach to get a card in a bad credit situation is to try cards with a preapproval process. This allows you to see what you might qualify for before the inquiry is added to your credit report.
You can find useful information on preapproved credit cards from major banks in our article.
Think about what landed you in the position of needing second chance credit cards to begin with and try avoiding those same habits. You will want to use your new credit card, but first make sure that you are going to be able to afford at least the minimum monthly payment. Otherwise, you will receive more negative marks on your credit report. Even better, make sure you pay your balance in full each month in order to avoid the extra cost of interest.
Many credit card companies will be able to calculate how much your monthly payment would be if you maxed out your credit card. Therefore, before you do that, you may want to give them a call to inquire about this. Remember, just because you have a $3,000 credit limit does not mean you can afford the monthly payments if you used it all.
After about a year or two of steady, timely payments, you will want to check your credit score again. If it has raised to the point where you are now considered to have at least average credit, you may no longer need a secured credit card. You can apply for a different card or talk to the credit department and ask for your credit account to be upgraded. At that time, your initial deposit may be refunded, the interest rate could drop, and you may no longer have to deal with annual fees.