Credit Card Application For Sub-Prime Customers

The first thing that I have to stress here is that having a credit card and not using it wisely is the single most common factor in dictating why a person has a bad credit history. Most of the time people can’t handle their debts in the way that they should. Having a credit card does not mean that you can buy anything you want and pay later. A credit card should be considered a convenience but not a facility to forward-spend what you think you might get in the future. That is a sure way towards the path of not being able to pay your bad credit credit cards and get yourself into trouble in the future. Credit cards are amongst the most expensive types of debts next to payday loans. This factor in itself should make people wise-up to using credit cards however due to their easy access many people choose to abuse the system to their own disadvantage.

There are ways you can go about obtaining a credit card if you have a bad credit history. The first and most obvious is to have a secured credit card which we will touch on later. I’ll instead focus on trying to obtain a normal unsecured credit card even if you have bad credit. Most lenders along with credit card companies will base their approval on your application on your credit score. It is thus important to do all you can to improve your credit score before the application process.

If you have previously tried to get an unsecured bad credit credit card but have your application turned down you can always re-apply but stating that you would be happy with a lower credit limit. This works especially well if you have a high paying job. Most credit card agencies will be happy to extend limited credit to you if you are a high income earner. This is similar to how people can get bad credit loans even if they have the worst credit scores but have a high income job.

The best solution for those with bad credit and can’t get a unsecured credit card is to consider the use of secured or prepaid credit cards. What happens is that it acts much like a debit card where you can only spend as much as you have in your account that you have attached with your credit card or for the agreed amount that you have secured a fixed asset to. The bank will not allow you any credit per-se but the benefits and accessibility of credit is still available to you. You can enjoy the points system and also any other associated benefits that the card may provide. It is however important to understand that you will still be charged for any interest that you have outstanding on the card at normal rates which is extremely high.

Credit card providers classify customers into two main categories, namely “preferred” and “good standing”. Both of these classifications are very different as only “preferred” customers are considered profitable to the credit card companies. “Preferred” customers are those that always run an on-going balance that can be charged interest on and as such help the credit card companies by giving them the opportunity to charge excessively high interest rates. “Good Standing” customers on the other hand are customers that pay off their balance every month and thus giving the credit card companies little chance to charge interest rates. These customers make little to no money for the credit card companies and are simply maintained because of an FCC requirement that they do so.

The smartest thing that any card holder can do is to always maintain a zero balance on your credit card at the months end. Basically you should always pay of your credit card at the end of the month so that no rates can be charged to you. Why would you want to pay your credit card provider money unnecessarily? Although it might seem strange most of the time it makes sense to even borrow money from your friends or relatives just to pay of you credit card debt at the end of the month so that you don’t get hit by charges for outstanding balances. Most cards have a 16% A.P.R which you must agree is extremely high.