Editorial Policy

Unsecured Credit Cards For People With Bad Credit

default author image

By Eva Norlyk Smith, Ph.D.
May 22, 2009

Once your credit has deteriorated, the rules of the game change, and your options for getting credit are limited. While in the past, you were able to use credit cards to give your budget a cash infusion, that option is now harder to come by. Instead, getting an unsecured credit card begins to serve a very different purpose: to help you rebuild your credit more quickly.

The initial credit line that you will be given with these cards is quite low, typically around $300. In addition, because these cards cater to a pool of people that represent a higher risk, issuers generally protect themselves by charging higher fees to open and maintain the account.

The good news is that an unsecured credit card enables you to accelerate the pace with which your credit improves. You can view it as a first date; you are essentially building a relationship with the credit card issuer. While the card issuer initially is cautious, over time, more options will open up to you, as long as you exhibit discipline in your credit usage, make your payments on time, and don’t exceed your credit limit. Over time, the lender will begin to offer increased credit limits. Similarly, if you need a car loan or a mortgage loan, a lender that you already have a history with will be more likely to extend this to you.

Most importantly, many issuers of credit cards for people with bad credit report regularly on your credit usage to the three major credit report bureaus, enabling you to make fast strides in rebuilding your credit.

The terms of unsecured credit cards differ widely, so don’t just go with the first offer that lands on your door step.