Bad credit: Unsecured, secured or prepaid credit cards?
Bad credit is no fun - that goes without saying. But don’t make the mistake of assuming your credit is improving, based on the number of credit card offers you receive in the mail on any given day.
My really bad-credit friend said this once: “I guess my credit score must be improving because credit cards are starting to send me offers again. I get them all the time.” No, in this case that probably means my friend’s really, really bad credit had improved to just bad credit status. After all, credit card companies have also been known to inadvertently offer credit to a 13-month-old.
All the offers being sent to my friend were secured credit cards that switched to unsecured over time (with good customer history). Not that there’s anything wrong with that! In fact, that may be one of the best ways to improve bad credit. It essentially means your card has a credit limit equal only to the amount of the deposit you put in the bank that issues the card to you. It works much like a reloadable prepaid debit card, the main difference being that a secured credit card can improve (or hurt) your credit score and a debit card really has no such effect.
Unsecured credit cards, on the other hand, are a whole different ball of wax. They are the ones everybody else gets, but customers with bad credit typically get much higher interest rates and annual fees attached. Mr. Credit Card provided a very thorough answer to a reader question along these lines, along with a list of bad credit offers. This fine Banks.com article will also teach you more about credit card offers for those with bad credit.
Whatever “bad credit” improvement method you choose, examine what is often the root problem - controlling monthly spending. That will help you have enough money to pay your credit card bill on time, one of the strongest determining factors in whether a credit card will help or hurt your credit rating. The other thing to remember: check your FICO score on your own, and don’t assume that your credit score is climbing because credit card companies suddenly have renewed faith in you as a customer.
September 18th, 2007 at 9:18 am
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September 18th, 2007 at 9:22 am
[…] Jake wrote an interesting post today onHere’s a quick excerptBad credit is no fun - that goes without saying. But don’t make the mistake of assuming your credit is improving, based on the number of credit card offers you receive in the mail on any given day. My really bad-credit friend said this … […]
September 18th, 2007 at 4:41 pm
[…] Improve bad credit: Unsecured, secured or prepaid?All the offers being sent to my friend were secured credit cards that switched to unsecured over time (with good customer history). Not that there s anything wrong with that! In fact, that may be one of the best ways to improve bad … Credit Score - Myths & Facts!The algorithm calculating a FICO score does not view our credit in the same way as a lender does. To the FICO score calculator, an individual’s income, assets and money in the bank is invisible. However it does have information about … Tags:Share This […]
September 22nd, 2007 at 3:38 pm
[…] default@goarticles.com (George Bell ) wrote an interesting post today onHere’s a quick excerptIn fact, that may be one of the best ways to improve bad credit. It essentially means your card has a credit limit equal only to the amount of the deposit you put in the bank that issues the card to you. It works much like a reloadable … […]
October 6th, 2007 at 3:27 pm
[…] Hayli Morrison wrote a fantastic post today on “Improve bad credit: Unsecured, secured or prepaid?”Here’s ONLY a quick extractBad credit is no fun - that goes without saying. But don’t make the mistake of assuming your credit is improving, based on the number of credit card offers you receive in the mail on any given day. My really bad-credit friend said this … […]
June 6th, 2008 at 11:00 pm
[…] with bad credit believe that more credit card mailings equal a credit score that is on the mend. This is not true. If anything, it indicates that the credit card companies smell an easy buck, someone who may not […]