Don’t worry if you have bad credit, there are host of card companies willing to take a chance with unsecured credit for people with poor or less than perfect credit. There are lenders who understand that a less than stellar credit rating an unsecured card may be the answer during the Christmas crunch. As shoppers visit the retail malls and merchants they will be offered a host of cards from each and every store. Signing up for in house store cards is one way to get the intro-rate and discounts but be aware that you must completely understand the terms and agreements of the card before signing up. If you think that you are getting ‘rewards’ and don’t want to give up the card because of the rewards then work out the details. If the card offers a cash back promotion look at how you will gain an advantage.
Cash Back Promotions
When you receive a 1% cash back promotion, on a 20% interest rate you will receive $1 for every $100 purchase. Sounds wonderful until you understand the mechanics of the situation. If you look at it closely, you will see that the 1% cash back, or $1 for every $100, is off set by the fact they are charging 20% per year. This means that you get 1% back but they keep the other 19%. If you have an outstanding balance this can add up over the year. They, meaning the banks, store or card holder, use the cash back incentive to lull consumers into using the card for more and bigger transactions.
Interest Rate
Getting in on the ground floor of the card and enjoying the honeymoon interest rate period may leave you in a blissful state; however, many retailers offer cards with rates higher than the average bank card. Interest rates of over 20% are common and you may want to think twice before signing up for a card that has a significant interest rate. When signing up for a card, investigate the lowest interest rate. It is better to have a secure low rate than a fancy reward program and a higher rate. Once the honeymoon is over the gloves will come off and the rates will increase so be happy with the rate you get.
Know Your Credit Score
Before even trying to get a card determine your credit score. A score around 700 is considered good and would probably ‘pass’ for a credit card. Score less than that are low and scores of 620 is the standard for the minimum for most credit cards. When applying for a credit card the interest rate you pay is determined mostly by the credit score you carry. The higher your score the lower the rate and the lower your credit score, below 620, the higher the interest rates. Low credit scores show that you are a bad risk and may not pay back the loan or charges on the card. Lenders are reluctant to loan money to people who have missed payments. It is important to know your score so that you are represented properly when the interest rate is revealed.
If you find inaccuracies in your credit report be sure to follow up and set them straight. Some things to ensure that are correct are:
Old and outdated information – This many include outdated addresses, bank information and investments.
Fraudulent accounts – Your identity may have been stolen and you may not have even known. Look for accounts that do not belong to you but appear on your report.
Inaccuracies should be submitted in writing and mailed to the reporting agency. To speed up the process include a copy of your report with the disputed items circled and provide proof (of paid bills for example) attached to the report.
Also include:
- Name and mailing address
- Date of birth
- Social security number
- Name of creditor disputing
- Signature
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