Credit Cards for People with Fair Credit Scores
There is a lot of attention on consumer credit scores especially since the recent changes made in the credit card industry. Unlike in years past, credit card providers are taking a much closer look at a consumer’s credit score when they decide to apply for a new credit card.
Credit card companies are not as apt to approving credit card applications unless the consumer’s credit score is in line with their requirements. Many credit card providers are looking for good to excellent credit scores before approving credit cards with low interest rates and great incentive offers.
What You Get With Fair Credit
There are still a number of options for consumers who have had credit problems in the past and as a result maintain lower credit scores. There are credit cards available for people who have fair credit but whose history still contains negative credit information.
Fair credit consumers may still be approved for a major credit card but will likely pay a higher rate in annual interest. They may also be required to pay an annual fee in order to keep the credit card account active. Additionally, consumers with fair credit may also not have access to higher credit limits that consumers with good credit possess. As a result, purchase power may be limited for fair credit card holders.
Utilizing Credit Cards for Better Credit Scores
A credit card can be an excellent resource for rebuilding credit that has been marred by financial problems. By using a credit card to make small, regular purchases, consumers can boost their credit scores by ensuring they pay off their credit card balance in full each month before the end of the billing cycle. Making late payments or missing them altogether will further damage consumer credit scores.
Ideally, consumers should only purchase on credit what they have in cash in the bank to cover the balance. Using credit cards can earn great rewards and other incentives but it is essential that the full debt is paid at the end of the billing cycle in order to see the efforts reflected in a credit score.
Credit Cards to Rebuild Fair Credit
One option many consumers use to get their credit profile back on track is a secure credit card. This type of credit card works like traditional credit cards except that the card holder makes a cash deposit into their credit card account. This deposit is then used as the card holder’s credit limit. Credit card companies have various requirements for the deposit amount and terms and conditions of the cards vary by type and provider.
A secured credit card is treated like a traditional credit card by merchants and benefits the user because card companies typically report the account activity to the credit reporting bureaus. Because purchases are deducted from the deposit amount, card holders are required to make additional deposits to keep the account in good standing. This activity is reported as a positive on a user’s credit file. By using a secured credit card effectively and making regular deposits, a secured card can be the springboard for qualifying for a traditional, unsecured credit card in the future.