A very bad credit rating based on a FICO Score contains scores ranging from 300 to 579. Usually, applicants with that FICO Score range can be required to pay an additional fee or even a deposit. That score range is also the smallest on the rating scale, and applicants might have a problem getting approval from issuers of the credit card.
Checking your FICO Score contains the factors that are negatively and positively impacting your credit, and knowing these factors might help you get your credit to where you wish it to be. Usually, paying all your bills on time and keeping your balances nominal will help you on the way to good credit.
There are two kinds of credit card options for bad credit, unsecured and secured. A secured credit card wants a deposit of a certain amount of money into a savings account, and the credit limit is usually based on a percentage of the deposited amount. That deposit for a secured credit card acts as collateral, and funds aren’t used for normal payments. This differs from a prepaid card, which draws from the funds you deposit and isn’t reported to credit bureaus. Plenty of credit cards are unsecured credit cards. An unsecured credit card needs no deposit and is simply a revolving line of credit with a limit that you may borrow against.
Secured credit cards: These can be a great tool for helping to build credit, but just if the issuer reports the credit history to the credit bureaus. Issuers will usually want a minimum security deposit, and some of them will even hold your deposit in an interest-bearing account, such as a CD. Secured credit card providers cannot want any credit history or have a minimum credit score for approval.
Fees: Some issuers for both unsecured and secured cards may or may not charge annual fees, and some might even charge monthly service fees on top of an annual fee. Paying attention to all of the diverse fees may help you understand your total costs.
Rates: Interest rates may vary significantly and may be either variable or fixed. Paying the all balance each month can help you avoid interest and to help maximize awards if these are offered. Some issuers have no penalties for missed payments, while some may raise your interest rates significantly.