Getting Credit in a Tight Credit Market |
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by: Janna Weiss
It wasn’t so long ago that mailboxes were overflowing with credit card offers. Even people with imperfect credit could get cards at a reasonable interest rate. That’s not true in the current credit market, which has tightened up dramatically, leaving sub-prime borrowers out in the cold. If you’ve got bad credit, it won’t be easy to get a credit card until the market loosens up again. In the meantime, take this advice to heart:
Don’t Give Up
There are still ways to build positive credit without obtaining an unsecured credit card. Form a relationship with a local bank, and take out a small personal loan. Rather than spending the money you’ve borrowed, use it to repay the loan in installments. By proving that you can repay a loan, you will earn the bank’s trust – and they will be more likely to lend you money or issue you credit cards in the future.
Negative Credit Items are Temporary
It’s best not to default on any accounts, but what if it couldn’t be helped and now you have negative marks on your credit report? Any unpaid or closed credit card accounts will come off of your credit report eventually, but it takes seven years from the date the account became delinquent. Until that time, you can work to add positive items to your report.
Make the Good Outweigh the Bad
Open new lines of credit and make sure to pay your bills on time and in full. Definitely avoid taking on more debt than you could easily repay. You can use secured credit cards to start rebuilding your credit. Some of these cards become unsecured after a specified length of time in which you make all of your payments on time and avoid going over your credit limit.
Avoid Fee-Harvesting Credit Cards
If your credit score is really low, but you don’t want a secured credit card, your options are pretty slim. There are companies which will issue a card to anyone, regardless of their credit score. However, these cards have notoriously low credit limits and very high fees. After all is said and done, you might have no more than $50 - $75 to make purchases with. That amount of available credit won’t do much for your credit score, so you might be better off with a secured card and a higher limit.
It’s not a good time to get credit if your score is low, but that doesn’t mean it’s impossible. Look around online and compare credit cards for people with poor or no credit. You’ll find that there are still plenty of ways to get your credit back in shape.
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