What is an unsecured credit card? An unsecured credit card is a card that allows us to make payments almost anywhere without cash. Unsecured credit cards can be issued by banks, retailers and other credit-granting institutions. All merchants who accept your credit cards will be paid by the credit card company in your name.
With credit cards, we can use the money that we do not have. On the other hand, credit cards like the Milestone Gold MasterCard, Credit One Bank Unsecured Platinum Visa, Discover it Secured Card, Indigo Platinum MasterCard, Total Visa Card, and Credit One Bank Visa are accepted almost everywhere and are therefore very convenient during your travels. Your lender must also tell you in advance when the interest rate will rise.
Determining Eligibility For Credit Cards
Now that you understand how credit cards work, it is time to look at how to apply for and obtain unsecured credit cards with less than perfect credit. Credit card companies primarily use two criteria for determining approval for issuing a credit card. These are your income and your FICO scores. Your income may include your monthly pay total plus any other income source you may have including a side job, alimony or support payments, monthly eBay sales or any other verifiable source of monthly support you receive. FICO (Fair Isaac Corporation) scores are a complex system developed to rate your credit usage taking into account how much credit you already have, how long you’ve had that credit, types of existing credit, timeliness of payments and percentage of available credit used.
When applying for an installment loan companies will usually delve deeper and examine your records, but today FICO scores are relied on heavily to determine eligibility, especially when applying for unsecured credit cards with bad credit cards history. Lower scores affected by too much credit or a less than perfect payment history do not automatically disqualify acceptance but they will affect the interest rate offered and the amount of credit.
Obtaining A Copy Of Your Credit Report
It is always a good idea to obtain a copy of your credit report at least annually to track how your credit history will affect you and measures to take to improve your scores. The US government requires each of the three major credit bureaus to provide you a free report yearly upon request. Simply click on Annual Credit Report to order your free copies. The reports won’t tell you your FICO scores but will let you see exactly what is affecting your credit and provide suggestions for improvement.
Available Unsecured Credit Card Options
When thinking of obtaining a credit card most people probably think of applying for a VISA, MasterCard or Discover credit card. These cards do offer more flexibility where they may be used and the variety of products that may be purchased from gas to restaurants to shopping or for travel. It is easy to see why these unsecured credit cards are highly desirable. It can be difficult to get approval for a number of these unsecured credit cards with bad credit cards in your current credit history. However, there are a number of major credit cards offered that are designed for individuals with lower FICO scores. The higher your monthly reported income, the greater your chances of approval. A simple internet search of unsecured credit cards for poor credit will reveal many options available. Some companies specifically offer major credit cards with the VISA and MasterCard for people in this situation. Here are a few currently being offered:
- Credit One Bank Platinum Visa for Rebuilding Credit
- Indigo MasterCard for Less than Perfect Credit
- Milestone® MasterCard – Bad Credit Considered
- Official NASCAR Credit Card from Credit One Bank
Minimum Payments and Other Credit Card Fees
Whether you can pay off the balance in full or not, you must pay at least the minimum payment each month to avoid interest rate increases or damage to your credit rating. Credit card fees include interest, insurance (except in the case of automobile insurance), administration fees, etc. However, if your card has an outstanding balance at the time of closing the account, you will still be responsible for repaying the entire loan. Most of the time, a credit card offer lasts about six months. In this case, the banks impose an interest rate. They are often expressed as an annual percentage rate. To determine how long it will take to pay off your debts, use a calculator.
Payment Process and Charges
The payment period is usually between 21 and 25 days and represents the time you are allowed to pay your balance in full without paying any interest charges. Some card issuers charge an annual fee to cover the cost of the account, while others do not. In most cases, you pay a monthly payment with interest. A credit card usually provides offers such as “Buy now and pay later”. If you have a credit card, you can make purchases using an approved credit line. You repay the loaned amount in small amounts each month. This means that you can continue to borrow even after you have paid off your balance. Membership fees or renewal fees may also be added. Remember, check how much these credit charges are. Your lender may also be able to cancel these charges so that you continue to do business with him. Once you activate a credit card, it’s up to you to use it as a payment method. Now, you can not only consider the credit card as a short-term loan, but it is also a “renewable” debt. You can then pay off the credit by repaying the amount used or letting it accumulate.
Minimum Monthly Payments
For most cards, you only need to pay a minimum amount each month. The credit company makes money by charging fees to consumers and by imposing fees on merchants who accept their cards as a method of payment. If you repay your balance in full each month, your lender usually gives you a grace period of at least 21 days for all new purchases. You can pay the full amount at the end of the month. You will probably pay a higher interest rate when you apply for a cash advance on your credit card and a lower interest rate when you use this card to make purchases. You will also probably pay a higher interest rate when you apply for a credit card with bad credit. To keep your grace period, reimburse everything you owe no later than the date on which your next payment is due.
Non-traditional Credit Cards
If you are not easily approved for one of these cards designed for lower credit scores and those applying for unsecured credit cards with bad credit cards there are still options. Obtain a co-signer, have someone add you as a cardholder to their existing card, obtain a secured credit card requiring a deposit or apply for non-VISA MasterCard credit cards such as store cards, gas cards, and online shopping cards. But will these cards improve credit scores? Absolutely. Any credit transactions regularly reported to credit agencies will affect your credit scores. If on-time payments are regularly made your credit will be positively affected.
Apply For Non-Major Credit Cards
An easy way to improve your creditworthiness is to start by applying for non-major credit cards. Many credit scores are affected by unforeseen job loss, medical emergencies, car accidents or any number of events. Start small and work your way back up. The important things to remember before applying for these unsecured credit cards is to choose companies who report to the credit bureaus. ARCO, Shell, and Chevron offer credit cards as do many other gas companies. You ask, will these cards improve credit scores. Those most definitely will.
Fingerhut is an online retailer. They will approve you for a small amount. Make your first online purchase. Pay it off according to terms and immediately they extend credit for a larger amount. There are a number of online retailers who offer similar credit building opportunities. Overstock, Gettington.com, The Shopping Channel, FlexShopper.com, LendYou.com, HSN.com, StoneBerry.com, Seventh Avenue.com, and QVC.com are a few online companies offering in-store purchase credit cards. All of these should help boost your credit scores when kept to very low available balances and paid timely. Remember that total available credit offered compared to income so limit usage. Be wise and responsible.
Store Credit Cards
Physical retailers who offer in-house credit cards include Lowe’s, Home Depot, Target, Walmart, Old Navy, Kohl’s, Victoria’s Secret and a multitude of other vendors. Remember that you are obtaining the cards to build credit not to add things to your inventory. Make small purchases pay monthly payments on time and you will see your credit begin to build. The key is not to get too many and to keep actual balances low. As you can see there are a number of credit cards available to make your life easier and improve your credit scores in the process.
Pay On Time
Maintaining a good payment history, keeping debt to a minimum and increasing your income will help boost your FICO scores. Gone will be the days of applying for unsecured credit cards with bad credit cards. Your ratings will be improved. Will these cards improve credit scores quickly? It will not happen overnight. It is amazing the results you may see within a year of responsible credit usage.