When you’re in this situation don’t think you’re out of options and remember there are plenty of people that are in a similar situation to you. That’s why there are financial institutions out there that are focusing on this target market regardless of what your current credit score may be.
You can have your credit go bad in a few different ways such as having large amounts of debt or not paying off those debts in a timely manner. A weaker score makes it harder when it comes to everything from applying for a loan to getting an apartment to even getting a proper cell phone plan.
Let’s look below at what needs to be done so you can get your credit back on the right path.
Building back up your credit
One of the major areas that can help you with your credit score is making payments on time. In fact, it’s one of those areas that you want to focus on first and always work to ensure that you can make those payments on time. Even missing one payment can affect your credit history. Consider setting up automatic payments to make sure that the minimum is never missed.
Another area to look at is how much of your total credit you’re actually using. This utilization of your credit is best around the 30% mark (meaning don’t borrow or use credit cards beyond the 30% limit), as that will help improve your score.
With all this focus on existing credit, you may think to yourself how yet another credit card can help you with redeeming your credit score to be better. First of all, with a new credit score, you’re going to decrease your total amount of utilization of your credit, which helps your score, as long as you don’t also start using it too often and for too much.
What are the core differences between a secured card and a guaranteed card?
The poor credit score you have may actually be limiting the possibility of getting that new credit card that can help with repairing it. Yet, you do have two options: secured or guaranteed credit cards that can help with your mission.
Secured Credit Card
Looking at how to get a secured card could be the easier option between the two. That’s because the limit on the card is based on what you’re looking to give as a secured deposit. If you’re looking to have a $500 credit card limit then you’ll typically put that much as a deposit for the duration of using the card. The deposit can be used again after a certain amount of time or when you cancel the card and it can also be used to make payments if you miss payments as well.
There’s not really any verification when it comes to getting a credit card that’s secured as it’s based on the deposit amount you’re willing to part with. You’ll still see your credit score improve as long as you make those payments on time.
Options:
- Bank of Montreal
With a secured deposit given to the bank to hold onto you should be able to get a real credit card (typically Mastercard) in no time. You can go all the way up to $10,000 with this type helping you build up your credit history or reduce your credit utilization. You will be able to apply online and do keep in mind there are fees associated such as the annual fee of just under $7 per year.
- Home Trust
Another great option is a secured credit card with a home trust. It also can go up to $10,000 for those willing to deposit that much. Keep in mind this one doesn’t have a 100% approval rate and there are some that may be rejected but that could be due to severe financial credit issues, even bankruptcy. The fee for this one is about $59 per year which makes it a pricier option. It also has an online application but the funds need to be sent manually.
Guaranteed Credit Card
Your other option is to get yourself a credit card that’s guaranteed. There are some additional factors to be considered for this card.
The approval rate is far from 100%, and you’ll have to go through a pre-qualification and a softer credit check. This will also check your ability to repay, such as your income.
Options:
- Capital One
A great way of getting approved with Capital One is to not have a Capital One card currently and have no outstanding debt with the company as well. The credit range offering is based on your existing score and other factors that can have you getting up to $7000 easily. You can also continue with a secured card method, but these also come as an unsecured option. Unfortunately, these cards typically will come with an annual fee of about $59 per year.
Refresh Financial
Refresh Financial will require some type of security deposit. It will also need you to have the capability to repay by checking that you have a consistent monthly income. You also typically have to have a bank account in good standing. The annual fee is much lower than most cards coming in at $12.95 per year and you can get yourself a limit of up to $10,000 as well. Also for those that want to get financially fit there’s a program known as the FIT. It’s a free course that will help to provide financial literacy plus strategies to help with your score.
In the end
You always want to make sure that you do your own personal due diligence on any type of credit you’re looking to get not just on a credit card. There are plenty of options out there from companies that are offering credit cards that can help support you on your journey of rebuilding your credit score and eventually help you see what financial freedom looks like.
Disclaimer: All loans and credit cards are subject to credit and underwriting approval. KreditGenius.co is an information website/blog and loan search platform, not a lender. KreditGenius.co only works with advertiser networks and partners that comply with laws and regulations. Interest rates range from 5.99% to 34.99% and depend on the assessment of your credit profile. Loans range from $300 to $35,000, with terms from 4 months to 60 months or more. For example, on a $4,000 loan paid monthly over 12 months, a person would pay $344.26 per month for a total of $4131.30 over the life of the loan.