Bad Credit? Don’t Get Taken for a Ride

Bad credit can be depressing. It keeps you from getting good rates on loans or, particularly in this economy, any loans at all. If you’ve ever been denied for credit, you know how lousy it feels to be discriminated against because of past mistakes. Of course, lenders use your credit history to determine how much of a risk they’re taking by lending you money or extending a line of credit.

Still, the fact that lenders need to protect themselves doesn’t mean you have to settle for predatory practices. If you have bad credit, there are ways to improve your situation without getting taken to the cleaners.

First, it’s important to shop around for the very best deal you can find. All sub-prime credit cards are not created equal. Some will squeeze you for every penny, while others have fair terms and conditions appropriate to your credit rating. Don’t waste your time applying for credit cards that won’t help you build up your credit score.

Beware of sub-prime credit cards that advertise low interest rates. The card issuer will recoup that money somehow, usually in the form of hidden fees and unfair restrictions. The low rate could just be a teaser rate that will skyrocket after a period of time. Most credit card interest rates are subject to change at any time, though there will soon be laws governing this. Also, some credit cards have monthly and annual fees, or account setup fees. These cards aren’t a very good deal if you’re getting a small credit limit to boot.

When you have bad credit, some lenders act like they’re doing you a huge favor by offering you a credit card. That’s because they are. Still, you need to make sure that you can use the card issuer to improve your credit score. Whenever you apply for a card, make sure the issuer reports to TransUnion, Equifax, and Experian. You want your timely payments to count for something! There are also cards that will upgrade to unsecured after you’ve paid on time for a year. Others offer credit limit increases after such a time.

Need to compare credit card rates? The Internet is a valuable tool. Go online to find the best deal on a secured or unsecured credit card for borrowers with poor credit. You’ll be surprised by how much the terms vary. Remember: the credit card industry is still largely unregulated, so it’s up to you to find a good deal and grab it. Good luck!

by: Janna Weiss