Unsecured Credit Cards Compared To Bad Credit Cards

Are you wondering why lending companies and utility providers are less willing to approve your credit application?

Here is an insight.

When it comes to taking out a loan, mortgages, insurance, and utilities, the providers do look at the credibility of the customer. The credibility tells how regularly you have been repaying your loans, or paying bills on time without any default.

Good payment history can guarantee an easy approval. Your good credit score plays a role in this approval.

FICO has formulated a credit score scheme which ranges from 300 to 800. A good score is 700 while fairly good 600. If your credit falls below 600 credit then this is a bad credit from the rating agencies. The alternative to bad credit cards are unsecured credit cards.

The unsecured credit card is a scenario where you get credit when you don’t have any money deposit in an account to cover your credit limit. Actually, life is easier with the unsecured credit card since you can enjoy the services and pay for them later.

Since there is risk involved with the unsecured cards, as an alternative for bad credit cards, if it is approved then the issuers has to share the risk as well. The consequence can be a high interest rate charged to the cardholder.

Usually, a credit card company charges approximately 13% to around 19% for bad credit borrowers and relatively cheaper rates of about 8.5% to 11.5% for good credit score borrowers. Clearly the bad credit borrower will pay more interest if they do not pay off their balance every month. Unsecured card holders enjoy less interest accruing on a comparable balance.

In summary: An unsecured credit card is the alternative to a bad credit card although it compromises on high interest rates which is avoidable by creating a good credit card score.

How To Get Credit Cards After Bankruptcy Discharge

A common question concerns getting a credit card after bankruptcy discharge. There are also many questions like: who is eligible, and how many years does it take to get this privilege?

Understanding a few tips can make it easy to find the right way to re-establish credit again.

1. Talk to your bankruptcy lawyer. They may be able to offer advice since they deal with credit issues all of the time.

They can offer useful advice on where to apply and how to structure you credit app in the right way for a faster approval. Remember that when you debts are discharged you are less of a risk then you were before when you had a higher debt load.

2. Secured or unsecured. With a secured credit card you are going to put up cash as collateral for approval on your new card. Generally the larger the deposit the higher your credit line will be.

For example, if you put up $1,000 to the credit card issuer this will be your credit line. As long as you pay that amount in full if you ever close your account you will get this deposit back.

It will be hard to get an unsecured credit card right away as you do not have adequate credit to be approved. However, use the Internet to check out what is available to you. You never know what you may find.

One final thing to keep in mind is check the terms from the credit card company before making your final choice on who to apply with. Understand what fees you are going to be charged and what the interest rate is.

Some banks try to take advantage of your situation and that can end up being a bad deal for you.