Debt Free

According to my research, there are over 5,000 people a day searching for some form of credit cards for people or businesses that have bad credit, which begs the question “Is getting another credit card if you already have bad credit a good idea?” I think that most people reading this already know the answer. In the majority of cases it's “Hell no!”

The problem is that for most people that have bad credit, credit cards were how they got there in the first place. Looking for a credit card if you used them to get your personal finances completely screwed up isn't going to make things any better. Too many people think that they can reverse the situation if only they can just get this one more card. Then, they'll turn things around, and everything will be okay. Only you and I know that in most cases, it won't be okay because the underlying causes of the problem still exist and until they are corrected, it's only going to be like giving a fifth of Jack to an alcoholic, who thinks “I'll just have one more and then I'll stop.”

In many cases it happens gradually. The problem is that few people actually track their finances, so they have little clue about exactly where the money goes, only that it's gone. To those that aren't financially savvy, use budgets, track their expenses, and go over their billing statements, it seems that one day they're simply blindsided. They wake up and realize they're in way over their head and have little hope of reversing the situation. If this sounds all to familiar, you're not alone. It can be a case of keeping up with the Joneses, being just a bit too social, gambling, or myriad other causes of excessive spending.

There are times when people with bad credit may need a credit card and it's not a bad idea. You may fall into one of these categories. If you had one time, extraordinary expenses or income loss that put you over the edge, such as job loss or medical bills, you may fall into this category. These experiences can destroy the credit of someone who previously was a prime credit risk. These people tend toward the financially responsible, but just got into a bad situation. In this day and age, living completely sans credit card can be a difficult proposition especially if you travel or purchase things on line (another addiction that can get you in trouble in a hurry).

You can use a credit card to help reestablish good credit, but it's essential that you've done all the groundwork first. Job 1 is to reign in your spending. If you're still spending more than you make, getting a new credit card is the last thing you need to be doing. Pay off any outstanding debts on existing cards, if you have any. If you have existing credit cards, don't get new ones. Just pay off the ones you have and lock all but one of them away somewhere. Keep the accounts open, because those aged accounts, and the availability of more credit, will help improve your credit score over time. This strategy will only raise your credit score back up if the accounts are in good standing and have low or no balances. Maxed out, or close to the limit cards will detract from your credit score.

You should only use new credit cards to help reestablish your credit if you have lost all your previous credit cards. In that case, you'll need to have some type of credit account to begin a successful track record of making timely payments. Two of the things that the FICO scoring system looks at is how much credit you have, and your credit profile. You want to have a balanced mix of credit types, such as personal loans, revolving credit (credit cards are a type of revolving credit), and mortgages.

The Three Types of Credit Cards for People With Bad Credit
Here's what to look for if you must have a credit card and your credit is not so hot. You'll have 3 basic choices; secured, unsecured or prepaid cards. Secured credit cards, as the name suggests, require some security against the the possible credit limit, limiting the lender's exposure to risk. This enables those with bad credit to qualify for credit cards they'd otherwise not have a prayer of getting. Typically the security is cash, the amount of which determines the credit limit for the new card. You'll usually be charged a fee for the privilege of having such a card.

One of your key tasks is to shop around for the best fee structure. Fees are one of the card issuer's main profit centers. Many people fixate on the interest rates they're paying and forget about the fees, which can be substantial. Make sure you check both. In addition, make sure that the card issuer reports your activity to Exeprian, Trans Union and Equifax, not just one or two of them. If you're using the card to rebuild sour credit, you want to get what you're paying for (and you are paying).

If you do well with this secured card, in time your card company will offer you a real, unsecured credit card. At first you'll probably have to live with higher interest rates, but make sure you inquire about lowering your interest rates. They may say “no” at first, but ask again every 3 to 6 months. As your credit improves, you'll qualify for better rates. If not from them, you'll be able to get a card from another company. Just don't start on the same death spiral that got you in such a mess in the first place.

Your other option is a prepaid credit card, typically either a Visa or MasterCard. These are really just a glorified debit card. With a pre-paid card, you deposit money into an account for security as with a secured card. The difference is that as you spend, it just depletes the money you deposited. With the secured card, you are actually using credit. The security money is just there in the case of a problem.

If you need a credit card, look at this!

If you need a credit card that's a perfect match for your credit and lifestyle, you can use the wonders of modern technology to find it. Centrro has developed a search engine that will actually look at your needs and match you with the perfect credit card. There are over 160 cards from 14 different card issuers, so chances are the perfect card is only a mouse click away! Click here to find your perfect card

Have a great, Debt Free Weekend!

GO COUGS - #4 (15-0)