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Credit Cards for People with Old Debt

By Edited Jun 4, 2015 0 0

A credit card is a necessity for most people in today's world, and without one you may find that there are things that you're just not able to do. Online shopping can be difficult, and even something as simple as reserving a hotel room or hiring a car can be impossible if you do not have a card.

If you have made mistakes with managing your debt in the past you can re-establish your credit profile but it will take a few years and you will have to make a few compromises.

The only way to re-establish your credit rating is to get a credit card and use it within the parameters set by the company. There are credit cards for people with old debt, but if your credit rating is poor, you might find that it difficult to get a card. Not every card company wants your business, so you need to be choosy which cards you apply for.

Avoid the Spiral...

The first thing that you need to be aware of is something called the rejection spiral. If you apply for too many cards and get too many rejections within a short period of time you may find that your credit rating gets lowered even more, making your bad situation worse. You need to be careful which companies you apply to, and read through a company's terms and conditions carefully before applying to reduce your chances of being rejected.

You should only apply for one card at a time and if rejected wait a few months before trying again.

There are many companies that specialize in giving credit cards to those with a bad credit history. Luma, for example, is one company that welcomes customers who have had debt in the past, and Capital One has excellent services for those with a poor credit history. It will be to your benefit to concentrate on applying for one of these cards first, since you are more likely to be accepted.

Know What You Are Getting...

Let's face facts, you have bad credit therefore you are a risk for any lender. Your past history has shown that you were not reliable when it comes to repaying debts in the past, yet you're asking a credit card company to trust that this time you will pay back the money that you borrow. In order for the bank to trust you you're going to have to pay more than normal to make it more worthwhile for the bank to carry the higher risk that lending to you represents. The companies that are offering deals with low interest rates will not want to know you; you are simply too much of a risk.

You will find that your credit limit is lower than the limit you used to have and that the interest rate you have to pay on any balance that you carry forward is higher.

Once You Have a Card...

Once you've got your first credit card you must act responsibly if you are intent on rebuilding a good credit history.

  • Always pay your balance, and pay it on time

  • Make at the very least the minimum payment on your card, and pay more if you can

  • Don't pay even one day late

  • Sometimes leave a carry-forward balance on your card, to prove to the bank that you can manage your debt

The Skinny on Credit Cards: How to Master the Credit Card Game
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Proving Yourself

Doing this will ensure that your credit rating improves, and then you'll be able to apply for cards that have higher credit limits and lower interest rates. You need to prove yourself first. If you are only paying the minimum payment your card will have a balance on it, a balance that you'll be paying high interest rates on.

Once your credit rating has improved a little you can apply for a second card with a lower interest rate, and then transfer the balance from your first card to your second card. This will end up costing you less money in the long run.

Even if you have had bad debts in the past and have a terrible credit history, it is possible for you to get a credit card, though you will have to accept terms that are more expensive than those given to other customers. But once you have a card you can then use it to rebuild your credit rating and thereby make yourself eligible for other cards. It can take many years to undo the damage on your credit report, but it is achievable.

Also, if you have any questions, comments or concerns then please be sure to make them in the comments section (that you should find just below) and we will be sure to get back to you as soon as possible.

BestCredit: How to Win the Credit Game, 2nd Edition
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(price as of Jun 4, 2015)


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