It is quite difficult for people who have low credit scores to be approved by major credit card companies that offer great deals and benefits. However, there are companies that still provide credit cards to these customers who want to build or improve their credit. Banks that offer these cards include First Progress, Capital One, National Express, Applied Bank, Open Sky, etc.
How can we determine if we fall under those people with low credit scores?
Mainly, if you filed for bankruptcy, debt settlement, have major delinquency records, several overdraft amounts from banks or credit card companies and bad payment history, expect low credit ratings.
What are the types of credit card available for them?
- Traditional credit cards- with high interest rates, with annual membership fee, higher penalty fees for late payments, overdraft amounts and returned payments.
- Prepaid Credit Cards- this works like a savings account. You can use it like a credit a card; however the credit limit will depend on how much you deposited on it.
This type of credit card caters to teenagers who are not eligible to get a credit card yet. First, due to being minors; second, they haven’t established their credit yet.
This helps their parents to train their children how to manage their finances well. At an early age, it is advisable for parents to teach them how to be responsible cardholders to build a very strong credit.
- Secured credit cards- these cards works like a regular credit card too, however, the account holder will need to deposit an amount to serve as secured funds to acquire a credit card.
Unlike prepaid credit cards that can be acquired by anyone, secured credit cards have age and income restrictions. Even if we can deposit right amount to get it, there is a set of rules that should be followed.
The credit limit will not always depend on how much you put on it. Lenders will determine how much your limit will be; these are 2 possible scenarios, either the full amount or a percentage of it.
For example, there are cases that an account holder deposited a secured fund for $1000, but the credit limit given by the bank is $700. Though, lenders can also increase the credit limit based on payment history.
When planning to get a secured credit card, it is important to compare and review terms and conditions, the rates, membership fees, and all other fees associated before signing a contract.
It won’t hurt if we check all the details of each credit card companies that offer secured credit cards, because each of them might have the same or different deals, better rates and so on.
Do all credit card companies offer all these types of credit card?
The answer is, not all do offer these credit cards. There are companies who only offer credit cards to those people who have a good or above par credit scores. There are also companies who cater to those people with low credit scores or new to credit.
Once we have acquired for a new credit card, whether it is a traditional prepaid or secured credit card, what really matter now is to manage our finances well, established a good payment history and aim to get a higher credit score. In the long run, you’ll see that all your efforts are worth it.