5 reasons to consider bad credit credit cards

Share

Credit cards have today become a ubiquitous financial tool that can prove to be very useful in certain circumstances. However, there are a number of possible reasons why an individual might face problems or difficulties getting credit from financial institutions that provide credit.

Amongst the main reasons why individuals might be refused credit is poor credit ratings due to bad credit in the past (ratings may be affected by previous failure to repay loans or bills). It may also be due to a lack of credit history as a result of self-employment, part time employment, unemployment, low income, no income, changes in address and even not being on the electoral register.

For anyone encountering credit issues, there are several bad credit credit cards available on offer that may be worth considering.

Designed for people with less than ideal credit scores or a lack of credit histories, these credit cards can prove to be a step in the right direction for those plagued by the lack of or poor credit ratings.

First and foremost, applying for bad credit credit cards can help an individual improve and better his or her credit rating. Every time an individual applies for credit, the credit provider makes checks of the financial history of the applicant, to determine the risk involved in the loan.

Late or missed payments show up on the history and may result in poorer credit rating. Those without established credit history may also be categorized by lenders as being more risky to lend to because of the lack of credit information of financial credibility.

However, establishing a history of diligent, responsible and prompt payments can result positively for an individual’s credit rating. Credit cards can thus help those with bad or no credit histories to get back on track, or to get on the track in the first place.

Following from the above, for those with bad or no credit, credit cards can be a fresh start to establish sound credit history, or to improve bad credit rating.

By using credit cards wisely and responsibly, making prompt payments and keeping within the given credit limit, poor credit ratings can be repaired in a relatively short span of time.

Even with poor or no credit ratings, credit cards can help individuals to make a head start in getting in control of their finances, managing their monies and planning for the future.

With the establishing or the rebuilding and improving of credit ratings through the responsible use of credit cards, individuals previously overwhelmed with bad credit issues can look forward to a better and brighter financial future.

This includes increased possibilities of better interest rates on credit and loans taken in the future, higher limits on credit cards over time and better terms and conditions for refinancing.

A good credit rating will open potential credit applicants up to easier and quicker approval for a wider variety of financial products. Not only does this put an individual in a stronger position to negotiate better terms with the credit provider, it also increases loan options for the individual.

As lender confidence increases with better credit ratings, more options for credit and loans will also be available to the individual. This will come with a higher chance of approval for credit or for taking out loans.

Bettering credit ratings or establishing credit histories notwithstanding, credit cards can be highly useful even for those with poor credit standing. These financial tools can prove to be lifesavers in the events of emergency, where there are expenses incurred that might go beyond what can be afforded just by using savings.

For these unfortunate events, such as repairing damaged property or financing medical procedures, credit cards can prove to be very helpful, as long as the credit is repaid as promptly as possible.

Join our newsletter

Screen_shot_2017-04-25_at_1.05.57_pm

Subscribe to get the latest "Engineer Your Finances" content via email.

Powered by ConvertKit
About the author

Join our newsletter

Subscribe to get the latest "Engineer Your Finances" content via email.

Powered by ConvertKit

ModestMoney.com Top Finance Blogs

Archives