How to Get a Visa Card With Poor Credit
Getting a credit card with poor credit is difficult, but not impossible. The consumer should be prepared to accept higher interest rates and lower credit limits. In the most extreme cases, it may be necessary to begin to rebuild a credit rating with a secured credit card or even a prepaid credit card. The consumer can then reapply for a credit card with a better term later.
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Things You'll Need
- Copy of your credit report including your FICO score
- Copy of tax return or pay stubs
- List of bills and other household expenses
Instructions
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Make a realistic assessment of your financial situation based on your financial records for income and household expenses. Having accurate records will be especially helpful for applying for any credit card, but especially for secured and prepaid cards. You will need to be able to determine how much you can afford for a secured card bank account or to prepay on a prepaid credit card.
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Determine exactly where your credit rating stands.This can be done by obtaining a free credit report from AnnualCreditReport.com (see Resources). Each consumer is entitled to one report every twelve months from each of the major credit reporting bureaus: Experian, Equifax, and TransUnion. Consider obtaining copies of your credit report from all three credit rating agencies.There can be significant differences between one credit reporting bureau and another. Obtaining a FICO score usually requires a small fee, but it can be worth the expense because the FICO score will tell you exactly where you stand, credit wise.
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Check the credit report(s) carefully for errors, and make corrections. Corrections must be submitted to the credit reporting bureau directly. For derogatory items which are accurate, consumers are entitled to write a 100 word statement of explanation to include mitigating factors such as job loss or medical bills. Any corrections should be reflected on the credit report before applying for credit cards, which will require significant waiting time.
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Determine what kind of credit card to apply for: unsecured, secured and prepaid, based on the credit report and your financial situation. Unsecured cards require no prepayment, and are somewhat more difficult to obtain with poor credit. Secured credit cards require a bank account to be established and maintained to cover some or all of the available credit limit. These cards are somewhat easier to obtain, especially if the applicant can show regular income. Prepaid cards require direct payment of the entire credit limit up front, with replenishment when the available credit runs low.
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Present as favorable a financial picture as honestly possible when applying for an unsecured credit card. It should be noted that these cards usually carry very low credit limits, and often have most of the credit limit already assigned to hefty fees which leave a very small initial available credit line. However, these cards report to all three credit reporting agencies, so card holders who maintain a consistent record of on-time payments and do not go over their credit limits can significantly improve their FICO score. Some unsecured cards also offer periodic credit limit increases to customers who maintain good records.
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Be prepared to open a bank account to cover some or all of the credit limit for a secured card. Such cards can be obtained by almost anyone who can show a minimum level of income.These cards are also usually reported to the credit reporting bureaus, so they can be used to improve the card holder's credit rating. Also, the bank accounts earn interest to which the card holder is entitled. In many cases, if the card holder maintains a good payment record, the subsidy (plus interest) is returned to the card holder and the the credit card becomes completely unsecured.
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Apply for a prepaid credit card if no other options are available. Prepaid cards are available to nearly everyone and sometimes do not even require a credit check at all. They give the card holder the advantage of having all of the credit limit available for spending. They also present a means for the card holder to control his spending, since the card will usually not authorize for more than the available prepaid balance. As the card holder's credit score improves, she can apply for an unsecured credit cards.
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Tips & Warnings
Beware of "credit" cards that can only be used to purchase merchandise from a particular merchant. These cards usually do NOT report to the credit reporting agencies and will not improve your credit rating. Although nearly all credit cards available with poor credit have high fees, some unsecured cards have exorbitant fees and should be avoided. Don't be fooled by websites that offer "free" credit reports. Such sites require you to subscribe to a credit reporting service. A fee is imposed after a specified trial period ends.
